Differing Burdens of Proof
in
Contract Claims, Tort Claims
John McKindles
June 2010
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As I write this article, I am in
the midst of prosecuting a multi-count civil claim, on behalf of three
plaintiffs against several defendants, under a variety of contract breach and
fraud counts. The case touches on a number of issues that are common in business
disputes and provides a useful “case study” that might prove valuable to
business owners.
Like many commercial
litigation cases, this claim alleges the following business counts:
-
breach of contract,
-
breach of covenant of good faith and
fair dealing,
-
negligent misrepresentation,
-
fraudulent misrepresentation,
-
intentional concealment,
-
fraudulent nondisclosure, and
-
civil conspiracy.
The plaintiffs’ claims are for actual and consequential damages in an amount to
be proven at trial, and for an award of punitive damages in an amount sufficient
to deter the defendants from committing similar torts in the future.
Each of the above
counts contains elements for which, generally, the plaintiff bears the burden of
proof. The extent of the plaintiffs’ burden varies from count to count. For
simplicity, I will review a couple of the above counts only, differentiating
between a contract-related count and a tort-related count (e.g., fraud).
In contrast to a
criminal case, in which the government must prove guilt beyond a reasonable
doubt, in a claim for breach of contract the plaintiff generally must justify
its claims merely by a “preponderance of the evidence” – i.e., by showing that
the claim against the defendant is more likely true than not. The types of
evidence to be shown in a contract claim are:
-
existence of a valid contract,
-
a breach by the charged party, and
-
consequent damages.
Over the years, a multitude of defenses has developed in case law that might
offset or negate these elements, such as equitable defenses of
unconscionability, illegal objective, “unclean hands,” anticipatory repudiation,
impossibility/impracticability of performance, frustration of purpose, and so
on.
The standard is
higher in tort claims and certain statutory claims, where the burden of proof is
by “clear and convincing evidence.” This is a much more stringent measure of
proof that lies somewhere between “preponderance” and “beyond reasonable doubt.”
The elements comprising a business tort claim, such as fraud, are greater in
number, and the measure of the level of proof (preponderance vs. clear and
convincing) may vary based on the nature of the relationship between the parties
(arm’s length vs. confidential, fiduciary relationship, etc.). These elements
generally include:
-
a representation,
-
its falsity,
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its materiality,
-
the speaker’s knowledge of its falsity
or ignorance of its truth,
-
the speaker’s intent that it should be
acted upon by the person in the manner reasonably contemplated,
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the hearer’s ignorance of its falsity,
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the hearer’s reliance on its truth,
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the hearer’s right to rely thereon, and
-
the hearer’s consequent and proximate
injury.
Prior to deciding to pursue any claim such as the above, it is essential that
you first do a comprehensive analysis in order to determine if you have the
provable facts necessary to support the claim. If you do not have this proof,
wait until you can develop those necessary proofs or pursue a different
direction. You simply do not want to learn of a factual deficiency after getting
financially enmired in
litigation. ● |
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