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A while ago I heard in a YouTube clip (I think it was from Legal Eagle channel) something like "95% of the contract disputes are won/lost directly by the contract itself"; unfortunately I cannot find it again.

Does anyone knows anything about the validity of such a statement? Are there studies? Or, is it like an obvious thing?

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  • Do you have a link to the YouTube clip? – ohwilleke Apr 17 at 0:08
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It is hard to tell what the statement in the OP that "95% of the contract disputes are won/lost directly by the contract itself" was intended to mean.

It isn't literally true. A breach of contract claim requires a showing in every case of (1) the existence of a contract giving rise to a contractual duty, (2) an unjustified breach of one or more of its valid terms, and (3) to recover more than nominal damages, a showing of the amount of damages caused by the breach.

In the simplest of breach of contract cases, say, a promissory note default case, proof of the existence of a signed original promissory note, and business records regarding the defendant's payment history establish all of these elements, and establish a prima facie case that the defendant is unable to seriously contest.

One possible intended meaning of the statement that you are paraphrasing is that usually the existence or non-existence of acts allegedly giving rise to a breach of the contract are undisputed and that the litigation primarily boils down to what the contract required in the fact of undisputed extrinsic evidence of breach of contract.

This is not my experience.

The overwhelming majority of contract lawsuits are basically collection actions for non-payment of an invoice, for foreclosure of a lien, or for eviction for non-payment of rent, in very simple transactions, where the party with a payment obligation has undisputedly failed to perform and the performance by the party to whom payment is due is not seriously disputed either. Probably 90%+ of contract cases have this character and are resolved by default judgment.

A majority of the remaining < 10% of contract cases settle with the plaintiff getting some payment or acknowledgment of debt from the defendant, usually with payment plans reached primarily based on considerations mostly related to ability to pay (which isn't legally relevant but is as a practical matter critical in the subsequent collection stage), even if there are minor or unlikely to succeed disputes over liability and damages issues on the merits.

Somewhere on the order of about 0.4%-4% of contract lawsuits involve cases where there are bona fide dispute regarding whether payment was made, or whether there was a legally recognized justification for non-payment such as the failure of the party to whom payment is owed to fully perform their obligations under the contract. The interesting cases usually involve disputes over whether someone earned the amount that they sought or instead failed to perform as agreed in some manner other than payment.

When there is a written contract, in the overwhelming majority of cases, the validity and terms of the written contract are undisputed, and efforts to argue that there were any side agreements or subsequent modifications of the original written contract are very challenging to prevail upon.

Disputes over breach and justification for breach are more common than disputes over the terms or meaning of a written contract, even though these are certainly disputed sometimes. And, of course, there are frequently disputes over whether there was a contract, and if so, what its terms were, in the case of express oral contracts, and contracts that are implied-in-fact or inferred from the course of dealings of the parties.

Another possible interpretation of the paraphrased sentiment is that usually the language of the contract determines what your rights are in a case. Certainly, the rights of the parties usually do boil down to what the language of the contracts requires.

Some Statistics

The Colorado state courts publish an annual report with statistical data every year. The annual report for the year 2017 was typical.

In District Courts (the courts of general jurisdiction) there were 247 civil bench trials (about a quarter of which are tort cases), and 218 civil jury trials in civil cases (about three-quarters of which are tort cases), which consist mostly of contract cases, but with a minority of tort cases and property rights case and cases involving statutory rights (it excludes evidentiary hearings in domestic relations or mental health or probate cases, or pre-trial evidentiary hearings such as hearings on preliminary injunction requests, eviction hearings, non-judicial foreclosure summary hearings, and criminal or quasi-criminal trials, hearings and cases) out of 89,632 civil cases filed. About 12,000 of these are contract lawsuits (52,000 are pro forma tax lien filings). Thus, there are about 240 contract case trials out of about 12,000 contact lawsuits, with about 2% of contract cases going to trial (about three-quarters of the time before judges instead of juries) (this excludes a very small number of disputed contract claims adjudicated within probate cases each year).

In County Courts (the courts of limited jurisdiction for claims under $15,000 in 2017), there were 801 civil bench trials, 14 civil jury trials, out of 140,462 civil cases filed (the vast majority of which are breach of contract cases and 98%+ of which are decided by judges usually in trials of one day or less, instead of juries), with about 0.6% of contract cases going to trial. This counts evictions as well as straight out contractual debt collection lawsuits as contract cases.

There were and 1,657 small claims court trials (always before a judge rathe than a jury and limited to disputes of $7,500 or less with limitations on lawyer involvement) out of 7,118 small claims cases filed, but the mix of cases is very diverse so mapping that to resolution method isn't really workable, even though more than half would be contract cases. Essentially all of the small claims cases that don't go to trial are default judgments and day of trial settlements.

By comparison, there were about 460 federal court contract cases filed in Colorado in 2016 (about 0.3% of all contract cases filed in Colorado in any given year). These cases go to trial at a rate similar to the 2% rate for state court of general jurisdiction contract cases (perhaps 7 bench trials and 2 jury trials a year) (this figure excludes bankruptcy court cases which each have multiple disputed or undisputed contract claims within them).

Certainly, it would be safe to say that less than 1-2% of contract lawsuits filed in Colorado go to trial. In all cases that don't go to trial, there was a default judgment (most common), settlement (next most common), or resolution in pre-trial motion practice (least common but more common than contract cases going to trial, let alone a jury trial).

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Does anyone knows anything about the validity of such a statement? Are there studies? Or, is it like an obvious thing?

The quoted statement in and of itself is pointless or does not make much sense. Every contract dispute (hence 100% of contract claims) depends on the terms of that contract. That is what makes it a contract dispute.

A party might frame his claim as "contract dispute" but to no avail because the controversy is devoid of elements supporting that legal theory, or the matter at issue is not within scope of the contract. This means that the controversy was not really a contract dispute, whence it cannot be said that the controversy was won/lost/decided by means of the contract.

From the wording of that statement it is unlikely that it meant that 95% of civil cases are contract disputes. One would need more context of the YouTube material in order to infer whether the remark was for making a point about something else.

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  • You are right - it should've been 95% of contract disputes; I corrected. – Victor Iorinescu Apr 16 at 20:01
  • @VictorIorinescu "it should've been 95% of contract disputes". In that case the statement is inaccurate for the reason I explained in the first paragraph. It would have to say "100% [of contract disputes]", but then the statement is tautological and therefore pointless. – Iñaki Viggers Apr 16 at 20:05

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