Overlap between Breach of Contract and Unfair and Deceptive Trade Practices Claims

September 20, 2012

Contract disputes are part of doing business. In most cases, the party on the other side is simply unable, or unwilling, to live up to its side of the bargain. Sometimes, though, the other party has acted with more sinister motives and has completely misrepresented itself or otherwise acted maliciously to harm your business. Even if the other party’s conduct does not rise to the level of fraud, there are other business “tort” claims that may be available. The most commonly used in North Carolina is a claim for unfair and deceptive trade practices.

The North Carolina Unfair Trade Practice Act, N.C. Gen. Stat. § 75-1.1, provides that “[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful.” It is a powerful statute because, if you can prove that you have been damaged as a result of the other party’s “unfair or deceptive acts or practices,” you are entitled to recover three times your actual damages and possibly attorney’s fees. This can create serious negotiating leverage.

The difficult part of the Unfair Trade Practices Act is that it does not list or explain in depth the types of conduct that are considered unfair or deceptive. It is left to the judge and jury to determine on a case by case basis. One question the appellate courts have had to address while interpreting the statute is the extent that the Unfair Trade Practices statutes overlaps with a claim for breach of contract?” This issue was recently addressed by the North Carolina Court of Appeals in Suntrust Bank v. Bryant/Sutphin Properties, LLC.

In the Suntrust case, the court clarified that unfair and deceptive claims can arise in two contexts: (1) a claim standing separate and apart from breach of contract claims or (2) a claim based upon a breach of contract accompanied by “substantial aggravating circumstances.” This means that, generally, a simple breach of contract will not create a right to treble damages under § 75-1.1. You must establish the “substantial aggravating circumstances,” and also prove a breach of contract. The jury in Suntrust strangely found unfair and deceptive acts and practices arising out of the contract but did not find a breach of contract. The Court of Appeals reversed the decision as to the unfair and deceptive trade practices recovery, because the jury failed to first find a breach of contract.

To determine whether you have a case under the Unfair Trade Practices Act, you should consult with an experienced business litigation lawyer. The Raleigh attorneys of Maginnis Law have represented plaintiffs and defendants in a variety of business disputes involving unfair and deceptive trade practice claims. The firm offers business consultations free of charge, and a number of billing arrangements to suit your business’ needs, including: hourly, flat rate, and, in certain circumstances, contingency.

You may submit the facts of your claim using our firm’s contact page, or you may call our Raleigh business litigation attorneys at 919.526.0450 or 919.480.8526. The firm represents business of all sizes throughout North Carolina, including Raleigh, Durham, Cary, Chapel Hill, Apex, Fayetteville, and Greenville.

 

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