The contract enforcement mechanism in the US

The US legal system consists of two tiers: The first at the Federal level and the second is the state level. The Topmost court of a state is called the State supreme court. Although these systems are independent, in certain cases they overlap.

There are two ways in which a dispute regarding a contract can be resolved. The first is through Court litigation and the second is through the ADR mechanism as provided by the dispute resolution clause provided in the contract.

1. Court litigation

Before jumping into the burden of proof, and the procedures, let us see the court structure in detail. As mentioned above, the US has two tiers of courts, the federal courts and the state courts.

The federal courts

The federal courts consist of three main courts: Trial courts, intermediate appellate courts and the Supreme Court. They can hear cases that come under federal law. They also have exclusive jurisdiction relating to federal copyright and patent claims and antitrust laws.

The state courts

State courts can hear all the matters except the cases in which the federal courts have exclusive jurisdiction. They also have the same structure as the federal system.

The lawyer/Attorney

In order for a lawyer to appear in any courts of the US, they have to be enrolled in the state bar. And they can practice in that state only. Out-of-the-state, lawyers can be admitted to the bar for a specific case or an occasion. Individuals can represent themselves.

Foreign lawyers

In some states, the out of the state lawyers rule applies to a foreign lawyer as well. Some states also allow them to become a foreign legal consultant. In New York state, a lawyer who is enrolled in a foreign bar can participate in matters in which they are retained.

Fees

The usual way of payment in the US is by the hour. Another method is the contingency fee where in matters where the client could receive damages, the lawyer can charge a percent of the amount the client receives.

Stages of a Civil Suit

• Presentation of plaint
• Notice to the defendant
• Pre-trail-exchange of info
• Trial: Jury or judge as per the request of the parties
• Post trail: appeal, motions for a new trial, mistrial, amendment of the judgement, etc

Interim Remedies

Before the trial starts, the party can ask for a TRO or temporary restraining order which has an extendable validity of 14 days. This can be done as many times till the final verdict is delivered. The following are the grounds in which a TRO can be sought:

• Likelihood of success on merits
• Likelihood of suffering irreparable harm if the court does not issue an injunction
• The balance of equities tips their favour
• The injunction is in the public interest.

Standard of Proof

The standard of proof that the civil courts of the US require is the preponderance of probabilities. That is if the party can convince the judge that their claim is more likely to be true than that of the other party, they can win the case.

Statute of Limitation

The concept of limitation refers to the time limit where one can file a suit for damages or other reliefs. For example, if the period of limitation is 7 years for a particular breach, then I will have to file a case within 6 years of that breach, for relief.

In some jurisdictions, the courts have adopted the rule of discovery, where the limitation period starts from the moment the breach was discovered, rather than the moment the breach happened.

Final remedies

There can be three types of remedies that a plaintiff can get.

• Damages including compensatory and punitive.
• Specific performance
• Injunction