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Legal Memorandum: Breach of Contract Claim

Issue: What must a party allege in order to establish a breach of contract and the covenant of good faith and fair dealing?

Area of Law: Business Organizations & Contracts
Keywords: Breach of contract claim; Covenant of good faith and fair dealing
Jurisdiction: New Jersey
Cited Cases: 199 N.J. Super. 212; 690 A.2d 575; 913 A.2d 821; 148 N.J. 396
Cited Statutes: None
Date: 09/01/2007

The mere allegation of the existence of a contract and its breach, without a statement as to how the contract was allegedly breached, is insufficient to state a claim for breach of contract.  The elements of a breach of contract action are (1) the existence of a valid contract; (2) the defective performance of the contract by the defendant; and (3) damages.  See Coyle v. Englander’s, 199 N.J. Super. 212, 223, 488 A.2d 1083, 1088 (1985).  See also N.J. Citizens United Reciprocal Exch. v. Am. Int’l Ins. Co. of N.J., 389 N.J. Super. 474, 478, 913 A.2d 821, 824 (App. Div. 2006) (party asserting claim for breach of contract has the burden of establishing all elements of the cause of action).

The breach of the implied covenant of good faith and fair dealing claim also must be dismissed.  It is well established under New Jersey law that every contract contains this implied covenant.  Sons of Thunders, Inc. v. Borden, Inc., 148 N.J. 396, 420, 690 A.2d 575, 587 (1997).  The covenant has been described as requiring neither party to do something that would have the effect of injuring the right of another party to receive the fruits of the contract.  Id. at 420, 690 A.2d at 575 (holding that dishonesty, continuing breach of contract, and repeated and blatant refusal to honor the contract constituted breach of the implied covenant of good faith and fair dealing).  […]

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