Contract Disputes: Look Closely, There’s More Than Meets the Eye

"This is just a simple breach of contract case, Your Honor…” How many times have judges and lawyers heard that? But if breach of contract cases are simple, why are so many decided by North Carolina’s appellate courts? And when a contract dispute arises, why can it be so hard to determine what rules apply and whether the rules have changed?

As the co-author and editor of the recently-published second edition of North Carolina Contract Law—the first edition was published more than 20 years ago—I hope to shed some light on these questions. The answer to the first question about the sheer number of contract cases helps us to answer the second about why the rules are hard to find, and vice versa. But first, a little historical perspective.

Our appellate courts have been deciding contract cases since the Supreme Court of North Carolina was established in 1819, giving us two centuries worth of case law on contract disputes. Founding Father George Mason wrote that the blessings of liberty require a “frequent recurrence to fundamental principles.” So, too, with deciding contract cases.

Some of the most fundamental contract issues in North Carolina were decided more than a century ago in a “golden age” of contract law, from Reconstruction through the Great Depression (roughly 1870-1930). In modern cases, there can be points of law that are so fundamental that they may receive limited discussion in court opinions. By contrast, older cases may provide a more extensive discussion of a rule, including its genesis and the reason for it, and give lawyers grounds for a clearer analysis and more persuasive argument.

If you sense a pattern here, you are right. Fundamental points of contract law can be difficult to find during research—or are simply overlooked in the heat of battle—and as a result many contract cases are not properly argued and are then decided on grounds that cannot withstand appellate scrutiny. More appellate opinions are then issued on contract cases, and the body of case law grows. It is now scattered across more than 650 official reporters from North Carolina’s appellate courts, as well as a vast number of unpublished opinions.

Although North Carolina has a long tradition of legal treatises on a number of topics, contract law was not one of them. Even with electronic research tools, attorneys and judges were faced with thousands of contract cases, some conflicting, some rarely or never cited, and some written in dense or archaic language that at times evades the understanding of the modern attorney.

Because contract disputes often involve excavating two centuries of cases in order to properly research an issue, in the 1990s I decided to undertake what has since become a career-spanning and career-defining project. After six years of work, in 2001 my co-author John Hutson and I published the legal treatise North Carolina Contract Law through Lexis. Since then, we’ve updated it each year with a cumulative supplement, and in 2021 we published a second edition that revises and updates the first edition and expands the treatise into a two-volume work.

In the twenty years since the first edition, an entire new generation of attorneys and judges has joined the profession, and the body of case law has grown, while statutory law has also evolved. Much has changed in the intervening two decades, substantively, procedurally, and technologically.

Electronic contracting has become routine, whether through programs like DocuSign or circulating agreements (or signature pages) in PDF form via email. And there are North Carolina appellate cases finding a contract was formed through an exchange of emails, including emails from attorneys.

Statutes have been enacted regarding “business contracts.” These changes now give parties a statutory basis to recover attorneys’ fees in the event a business contract is breached, or override traditional policy objections to allow the selection of North Carolina law as the governing law for the contract. They also give parties a stronger basis for selecting North Carolina as the forum to litigate disputes, and to largely preclude objections based on personal jurisdiction or an inconvenient forum. Articles 1 and 2 of North Carolina’s Uniform Commercial Code have been revised in various ways, and actions under the North Carolina Products Liability Act have also been frequently litigated, giving more clarity to matters involving contracts for the sale of goods and product liability disputes.

Since 2001, most contract cases have been decided by the Court of Appeals rather than the Supreme Court, and a significant portion of its opinions have been in unpublished decisions. In 2014, however, the General Assembly provided an additional route of appeal to the Supreme Court. Mandatory complex business cases decided by the Business Court became appealable as of right directly to the Supreme Court, allowing North Carolina’s highest court to decide, in published opinions, some of the most complex contract matters.

Since the first edition of North Carolina Contract Law, there has been a growing acceptance among the trial and appellate courts for contract cases to be dismissed at the pleadings stage. This trend highlights the need for counsel, prior to filing suit, to fully appreciate the fundamentals of contract law, the facts of the case, the terms of the contract in dispute, and the requirements of the Rules of Civil Procedure.

Fundamental issues in contract law remain the most frequently litigated, as shown by the ever-increasing numbers of cases that turn on matters of mutual assent, consideration, the statute of frauds, and the parol evidence rule. The fact that matters such as offer and acceptance are the subject of centuries of North Carolina precedent, yet still generate so much modern appellate litigation, suggests that bedrock principles of contract law remain underappreciated—and that contract cases are not as simple as they may seem.

This article was originally published by North Carolina Lawyers Weekly on Feb. 3, 2022, and has been republished here with the consent of NCLW.