Hi Nancy1. First, let me point out that "breach of contract" and
"reliance" are two separate issues in the law. "Breach of contract"
is a recognized claim in California. It has four elements that must
be proven:
(1) the existence and terms of the contract itself;
(2) plaintiff's performance of the contract or excuse for nonperformance;
(3) defendants' breach; and
(4) the resulting damage to the plaintiff.
(See, for example, _Reichert v. General Ins. Co._ (1968) 68 Cal.2d
822, 830; see also California Book of Approved Jury Instructions
(BAJI) 10.85 -- http://www.netlawlibraries.com/jurinst/ji_010a.html#10.85
)
"Reliance," on the other hand, is NOT a recognized claim in and of
itself. Instead, it is a PART of a claim for fraud/misrepresentation.
In order to bring an action against somebody for fraud, you have to
prove:
"1. The defendant must have made a representation as to a past or
existing material fact;
2. The representation must have been false;
3. The defendant must have known that the representation was false
when made [or must have made the representation recklessly without
knowing whether it was true or false];
4. The defendant must have made the representation with an intent to
defraud the plaintiff, that is, [he] [she] must have made the
representation for the purpose of inducing the plaintiff to rely upon
it and to act or to refrain from acting in reliance thereon;
5. The plaintiff must have been unaware of the falsity of the
representation; must have acted in reliance upon the truth of the
representation and must have been justified in relying upon the
representation;
6. And, finally, as a result of the reliance upon the truth of the
representation, the plaintiff must have sustained damage."
California BAJI 12.31
http://www.netlawlibraries.com/jurinst/ji_012.html#12.31
So you can see from #4, 5, and 6, that "reliance" is part of a case for fraud.
Let's discuss breach of contract first. Assuming that you can prove
an enforceable oral agreement (yes, oral agreements ARE usually valid
with certain exceptions); assuming that you can prove that you
performed your part of the deal; and assuming that you can prove the
defendant's breach (which should be the easy part -- you simply state
under oath that you haven't been paid); then the question becomes,
what are your damages? And this is also simple.
Where the contract requires the defendant only to pay money (as
opposed to perform some other task), then the measure of damages is
the amount due under the terms of the contract, plus 10% interest on
that sum (assuming it was a sum certain) from the date of the breach.
(See BAJI 10.93, http://www.netlawlibraries.com/jurinst/ji_010a.html#10.90
; California Civil Code Section 3302.)
Punitive damages, damages for emotional distress, and the like, are
NOT available in contract cases. (See California Civil Code Section
3294; California Civil Code Section 3302.) For purposes of a
breach-of-contract case, it does not matter that you were relying on
the money, or that you incurred other obligations, or any other
extraneous issue. You are only entitled to receive what the contract
calls for -- even though the breach may have seriously harmed your
financial position and caused you additional damage.
However -- punitive damages and damages for emotional distress ARE
available in FRAUD cases. Here is where your "reliance" issue arises
-- IF you can demonstrate that the defendant never had any intention
of paying you for these transactions. If you can prove that the
defendant deliberately lied to you in order to induce you to continue
providing these leads, then you get to the issue of whether you
"relied" on the promise of incoming money.
The measure of damages for fraud is much broader than the damages
available for breach of contract. Instead of being limited to the
amount due under the contract, in a fraud case the defendant would be
liable for "all the detriment proximately caused" by the fraud,
"whether it could have been anticipated or
not." (Civil Code Section 3333,
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=03001-04000&file=3333-3343.7
)
Civil Code Section 1709 provides that "[o]ne who willfully deceives
another with intent to induce him to alter his position to his injury
or risk, is liable for any damage which he thereby suffers."
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=01001-02000&file=1708-1725
Note the difference between these statutes and the measure of damages
for contract cases. In a contract case, the defendant is only liable
for the amount due under the contract, plus interest -- no matter how
badly you needed the money. In a fraud case, the defendant is on the
hook for WHATEVER harm is caused to you, including damage to your
credit, late fees on other obligations, and so on. But to get to
that, you have to be able to prove that he lied to you.
I hope this has been helpful. If I can provide any further
assistance, please don't hesitate to ask for clarification. |
