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BREACH OF CONTRACT
Contracts in Louisiana are known as “conventional obligations.” The “obligor” is the one who owes performance under the contract; the “obligee” is the one to whom the performance is owed. Performance may consist of giving, doing something, or not doing something.
When an obligor fails to perform as promised, or performs late, or performs defectively, he breaches the contract. The obligee may have various remedies as a result of the breach. Those remedies may include suing to make the obligor perform; suing for money damages; or suing to rescind or cancel the contract.
Louisiana is somewhat unique in imposing on the parties to a contract the obligation to act in good faith. A party’s failure to act in good faith can sometimes be a breach of the contract.
Louisiana follows the “American Rule” that generally allows recovery of attorney fees in breach of contract cases only where the contract specifically provides for attorney fees. However, certain types of contracts – and certain types of breaches – may provide an avenue to recover attorney fees if there is no attorney fee provision in the contract.
Rhorer Law Firm has litigated a wide variety of breach of contract lawsuits, including employee wage disputes; failure to pay commissions; contractor and sub-contractor claims (with and without liens); promissory notes; loans; and real estate transaction disputes. Recently, we filed suit for a local sales person and recovered nearly $500,000 in commissions that a national company based in New York was refusing to pay; we forced an international refinery company to pay an additional $538,000 it was withholding from a contractor; and we secured a confidential sum from an area janitorial service when one of its employees misappropriated inventory from a client.
UNFAIR/DECEPTIVE TRADE PRACTICES
The Louisiana Unfair Trade Practices and Consumer Protection Law (“LUTPA”), La. R.S. 51:1401, et seq. declares unlawful any “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Any person who suffers a loss as a result of such an act or practice can sue under LUTPA. If successful, that person may also recover attorney fees.
LUTPA does not define “unfair or deceptive acts or practices.” Courts decide on a case by case basis whether LUTPA applies to any particular conduct. For LUTPA to apply, the courts require that the conduct amount to “egregious actions involving elements of fraud, misrepresentations, deception, or other unethical conduct.”
Historically, courts had held that only consumers and business competitors were allowed to sue under LUTPA. Recently, the Louisiana Supreme Court in Cheramie Svc., Inc. v. Shell Deepwater Prod., Inc., 2009-1633 (La. 4/23/10), 35 So.3d 1053, expanded LUTPA to include any person who suffers a loss.
NON-COMPETE AGREEMENTS
Non-compete agreements – or covenants not to compete – are contracts where one person agrees not to compete against another. Louisiana permits non-compete agreements, but only if they comply with very precise statutory restrictions.
We usually see non-compete agreements in the employer/employee context, where an employee has agreed not to compete against his employer after the end of the employment relationship. The non-compete agreement may be part of an agreement that also restricts solicitation of customers and fellow employees and the use of confidential information.
Non-compete agreements – especially in the employer/employee context – can be very onerous. Employers may condition employment on an employee’s agreement not to compete for months or even years after termination, without any promise not to fire the employee for no reason.
Understandably, most courts disfavor non-compete agreements, and look for ways to nullify them. Whether you are an employer seeking to enforce a non-compete agreement, or an employee questioning the validity of one you have signed, it is important to seek counsel from an attorney very familiar with the nuances of Louisiana law on covenants not to compete.
Rhorer Law Firm has extensive experience in drafting, analyzing, and litigating non-compete agreements, non-solicitation agreements, and confidentiality agreements – for both employers and employees, as well as independent contractors and persons who are selling or who have sold businesses.
ARBITRATION DISPUTES
Parties to a contract may agree to arbitrate any dispute that arises out of the contract. The arbitration agreement may arise under the Federal Arbitration Act or the Louisiana Binding Arbitration Law. The two are nearly identical.
Arbitration is often promoted as a cost-effective way to resolve disputes without resort to the court system. Where the contracting parties are of equal bargaining power and equally sophisticated, arbitration agreements may indeed serve a mutual purpose.
Unfortunately, we now see many arbitration agreements in consumer transactions, where a product manufacturer or distributor presents an unsuspecting consumer with a take-it-or-leave-it option. The United States Supreme Court, in the 5-to-4 decision in AT&T Mobility, LLC v. Concepcion, 131 S. Ct. 45 (April 27, 2011) very recently held that an arbitration agreement that prohibited the customer from bringing a class action arbitration was valid, and each customer would be required to bring a separate, expensive arbitration claim over a relatively insignificant sum.
It is the opinion of Rhorer Law Firm that Concepcion will serve only to immunize manufacturers whose product causes collectively huge damage to its many customers but only very small damage to each individual customer.
Rhorer Law Firm has handled commercial arbitration disputes involving product defects, construction defects, and breaches of commercial contracts.
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