Elements of Nevada's Theories of Liability

Breach of Contract

 

Breach of Contract

Elements

To prevail on a claim for breach of contract in Nevada, a plaintiff must prove:

(1) the existence of a valid contract,

(2) a breach by the defendant, and

(3) damage as a result of the breach.

 

Example Cases

Golden v. McKim, 37 Nev. 205, 141 P. 676, 678 (1914); Richardson v. Jones, 1 Nev. 405, 405 (1865); Cohen-Breen v. Gray Television Group, Inc., 661 F. Supp. 2d 1158, 1171 (D. Nev. 2009); Brown v. Kinross Gold U.S.A., Inc., 531 F. Supp. 2d 1234, 1240 (D. Nev. 2008); Saini v. Int’l Game Tech., 434 F. Supp. 2d 913, 919–20 (D. Nev. 2006); Calloway v. City of Reno, 116 Nev. 250, 256, 993 P.2d 1259, 1265 (Nev. 2000)(quoting Bernard v. Rockhill Dev. Co., 103 Nev. 132, 135, 734 P.2d 1238, 1240 (1987)).

Proof

Basic contract principles require, for an enforceable contract, an offer and acceptance, meeting of the minds, and consideration.  May v. Anderson, 121 Nev. 668, 672, 119 P.3d 1254, 1257 (2005)..

“Consideration” is a term of art, a word with a well-understood meaning in the law, embracing any “right, interest, profit or benefit.”  Ducey v. United States, 713 F.2d 504, 510 (9th Cir. 1983)..

English law requires that consideration—”something of value in the eye of the law”—be given in exchange for a promise in order to make the promise an enforceable contract. The same requirement applies in the case of an amendment to a contract. Either a benefit to the promisor or a detriment to the promisee can provide consideration. So long as a contract provides some consideration, it may be minimal—even a peppercorn. Courts do not inquire into the value or adequacy of the consideration. RLS Assocs., LLC v. United Bank of Kuwait PLC, 380 F.3d 704, 709 (2d Cir. 2004) (internal citations omitted).

The actual value of the property at the time of the transfer, a vigorously contested fact, is immaterial. We recall the first lesson in contracts, the peppercorn theory-that courts will not inquire into the adequacy of consideration, so long as it was true and valuable. Pope v. Sav. Bank of Puget Sound, 850 F.2d 1345, 1356 (9th Cir. 1988).

The doctrine of promissory estoppel, which embraces the concept of detrimental reliance, is intended as a substitute for consideration, and not as a substitute for an agreement between the parties. Vancheri v. GNLV Corp., 105 Nev. 417, 421, 777 P.2d 366, 369 (1989).

Damages

As a general rule, an aggrieved party’s damages for breach of contract are limited to the amount specified in a valid liquidated damages clause. 5 Arthur L. Corbin, Corbin on Contracts § 1061 (1964). Thus, if the bond forfeiture served as liquidated damages, the trial court should not have awarded the city additional damages of $14,544.
American Fire & Safety, Inc. v. City of North Las Vegas, 109 Nev. 357, 359, 849 P.2d 352, 354 (Nev. 1993).

Defenses

The Parol-Evidence Rule

  • Prior negotiations merge with contract/not admissible

“Under [the parol-evidence] rule all prior negotiations and agreements are deemed merged in the written contract, and parol evidence is not admissible to vary or contradict its terms.”
Tallman v. First Nat’l Bank of Nev., 66 Nev. 248, 256–57, 208 P.2d 302, 306 (1949).

 

  • Prior negotiations merge with contract

“It is well settled, by a long line of decisions of this court, that, when the parties reduce their contract to writing, all oral negotiations and stipulations are merged therein.”
Gage v. Phillips, 21 Nev. 150, 26 P. 60, 61, 37 Am.St.Rep. 494. (Nev. 1891).

  • Couching parol evidence as a “fraud” argument is not allowed

“The general rule is that, when parties have committed their agreements to writing, all oral negotiations and stipulations are embodied in the writing itself. Now, in this case, while it is contended that the fraud practiced was in obtaining the contract, the real matter relied upon goes to show an agreement different in terms from that signed by the parties. This is the veriest sophistry. To sanction this contention would be to permit the solemn written contract of the parties to be overthrown by showing that the parties agreed orally to something entirely at variance from the written contract. This cannot be.”
Nev. Mining & Exploration Co. v. Rae, 47 Nev. 173, 828, 223 P. 825, 828 (1924).

  • Not allowed to use parol evidence to show “true” intentions of parties

“The invoked rule, though by custom called a rule of evidence, is in fact a rule of substantive law, as has often been explained. . . When the plaintiff pleads that the writing (a release) does not express the intentions of the parties to it at the time, he pleads something which the law will not permit him to prove.” Natrona Power Co. v. Clark, 31 Wyo. 284, 225 P. 586, 589.”
Tallman v. First Nat. Bank of Nev., 66 Nev. 248, 257, 208 P.2d 302, 306 (Nev. 1949).

 

Misc. Defenses

Misc

  • The Existence of a Valid Contract

Basic contract principles require, for an enforceable contract, an offer and acceptance, meeting of the minds, and consideration. With respect to contract formation, preliminary negotiations do not constitute a binding contract unless the parties have agreed to all material terms. A valid contract cannot exist when material terms are lacking or are insufficiently certain and definite. A contract can be formed, however, when the parties have agreed to the material terms, even though the contract’s exact language is not finalized until later. In the case of a settlement agreement, a court cannot compel compliance when material terms remain uncertain.FN6 The court must be able to ascertain what is required of the respective parties.
May v. Anderson, 121 Nev. 668, 119 P.3d 1254, 1257 (2005).

  • Breach of Covenant Not to Compete

NRS 613.200 Prevention of employment of person who has been discharged or who terminates employment unlawful; criminal and administrative penalties; exception.
1. Except as otherwise provided in this section, any person, association, company or corporation within this State, or any agent or officer on behalf of the person, association, company or corporation, who willfully does anything intended to prevent any person who for any cause left or was discharged from his, her or its employ from obtaining employment elsewhere in this State is guilty of a gross misdemeanor and shall be punished by a fine of not more than $5,000.
2. In addition to any other remedy or penalty, the Labor Commissioner may impose against each culpable party an administrative penalty of not more than $5,000 for each such violation.
3. If a fine or an administrative penalty is imposed pursuant to this section, the costs of the proceeding, including investigative costs and attorney’s fees, may be recovered by the Labor Commissioner.
4. The provisions of this section do not prohibit a person, association, company, corporation, agent or officer from negotiating, executing and enforcing an agreement with an employee of the person, association, company or corporation which, upon termination of the employment, prohibits the employee from:
(a) Pursuing a similar vocation in competition with or becoming employed by a competitor of the person, association, company or corporation; or
(b) Disclosing any trade secrets, business methods, lists of customers, secret formulas or processes or confidential information learned or obtained during the course of his or her employment with the person, association, company or corporation,

  • Valuable Consideration

We recognize “that noncompetition covenants must be supported by valuable consideration, which may include continued employment after the employee’s agreement to the covenant,”

Traffic Control Servs., Inc. v. United Rentals Nw., Inc., 120 Nev. 168, 174–75 n.14, 87 P.3d 1054, 1059 n.14 (2004).

“[A]n at-will employee’s continued employment is sufficient consideration for enforcing a non-competition agreement.”
Camco, Inc. v. Baker, 113 Nev. 512, 517, 936 P.2d 829, 832 (1997).]

  • Reasonability
    “A restrictive covenant on employment will be upheld only if it is reasonably necessary to protect the business and goodwill of the employer. Hansen v. Edwards, 83 Nev. 189, 191, 426 P.2d 792, 793 (1967). The amount of time the covenant lasts, the territory it covers, and the hardship imposed upon the person restricted are factors for the court to consider in determining whether such a covenant is reasonable. Id. Here, the restrictive covenant prohibited Jones from competing with Deeter within a 100-mile radius of Reno/Sparks for five years after leaving Deeter’s employ. After careful consideration of all the relevant factors, we conclude that the covenant is not reasonable. Although it appears that developing a customer base for the lighting retrofitting business is difficult, we nevertheless believe that a five-year duration is not reasonably necessary to protect Deeter’s business and places too great a hardship on Jones.” Jones v. Deeter, 112 Nev. 291, 296, 913 P.2d 1272, 1275 (1996).

The Nevada Supreme Court in Hansen v. Edwards, 83 Nev. 189, 192, 426 P.2d 792, 793 (1967), cited the following cases with approval, finding the following strictures reasonable in regards to a covenant not to compete:

area of 100 miles for a period of ten years–Foltz v. Struxness, 215 P.2d 133 (Kan.1950);
25 mile radius for three years–Cogley Clinic v. Martini, 253 Iowa 541, 112 N.W.2d 678 (1962); and
county limits and three years–Lovelace Clinic v. Murphy, 76 N.M. 645, 471 P.2d 450 (1966).

 

  • Failure to read the contract

Courts have consistently held that one is bound by any document one signs in spite of any ignorance of the document’s content, providing there has been no misrepresentation. See, e.g., John Call Engineering v. Manti City Corp., 743 P.2d 1205 (Utah 1987); Skagit State Bank v. Rasmussen, 109 Wash. 2d 377, 745 P.2d 37 (Wash. 1987). In addition, the RESTATEMENT (SECOND) OF CONTRACTS § 211 (1981) provides:

recipient’s fault in not knowing or discovering the facts before making the contract does not make his reliance unjustified unless it amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. The comments to § 211 note that if the recipient should have discovered the falsity by making a cursory examination, his reliance is clearly not justified and he is not entitled to relief; he is expected to use his senses and not rely blindly on the maker’s assertions. Id. at cmt. b.

Yee v. Weiss, 110 Nev. 657, 662 (Nev. 1994).