When Does a Breach of Contract Become a Crime in Colorado?
In the world of business and personal agreements in Colorado, the term “breach of contract” is often tossed around when one party feels wronged by another’s failure to uphold their end of a deal. But when does a mere breach of contract cross the line into the realm of criminal activity?
Understanding Breach of Contract
A breach of contract in Colorado occurs when one party does not fulfill their obligations as outlined in a legally binding agreement, whether it’s failing to deliver goods, pay for services, or perform a duty agreed upon. Typically, these matters are settled in civil court, where the wronged party can seek compensation or specific performance. However, under certain circumstances, what starts as a civil issue can escalate into a criminal matter.
The Path from Breach to Crime
The transition from a breach of contract to a crime hinges on the presence of fraudulent or deceitful intent. In Colorado, if the breach involves intentional deception or theft, such as misrepresenting services, not delivering paid goods, or using deceit to secure a contract, it may also constitute a criminal offense.
Most crimes that have some sort of contract theme are stated in Title 18, Article 5 of the Colorado Revised Statutes. The statutes detail a variety of fraudulent activities, which include:
Forgery, Simulation, Impersonation, and Related Offenses
Forgery involves the unauthorized making, alteration, or completion of a written instrument with the intent to defraud. This could include signing someone else’s name on a check or falsifying an official document.
Simulation refers to creating a false appearance or pretending something is real, such as creating fake antiques or art.
Impersonation involves assuming another person’s identity, typically for personal gain or to gain access to the other person’s benefits or rights.
Fraud in Obtaining Property or Services
This type of fraud includes acts where an individual deceitfully gains possession of property or services. For example, lying on a mortgage application to obtain a loan or using deception to secure a contract for services that the fraudster never intends to deliver as promised.
Fraudulent and Deceptive Sales and Business Practices
This encompasses a broad range of deceptive practices in the marketplace. It includes false advertising (promoting a product as having benefits it does not possess), bait-and-switch selling tactics, and other deceptive merchandising practices.
Bribery and Rigging of Contests
Bribery involves offering, giving, receiving, or soliciting something of value to influence the actions of an official or other person in charge of a public or legal duty.
Rigging of Contests covers actions aimed at unfairly influencing the outcome of a contest, lottery, or other games of chance for personal benefit.
Offenses Relating to the Uniform Commercial Code
These offenses typically involve fraud related to negotiable instruments, bank deposits and collections, funds transfers, letters of credit, warehouse receipts, bills of lading, and other documents covered under the UCC.
Financial Transaction Device Crime Act
These crimes involve the unauthorized use, manufacture, or distribution of financial transaction devices such as credit cards, debit cards, and electronic funds transfer cards. Including stealing someone’s credit card information to make unauthorized purchases or cloning credit cards.
Equity Skimming and Related Offenses
Equity skimming typically involves an individual fraudulently obtaining title to a property, then diverting funds intended for mortgage payments for personal use, thus endangering the property owner’s equity in the property.
Identity Theft and Related Offenses
Identity theft includes stealing someone else’s personal information, such as Social Security numbers or banking information, and using it to commit theft or fraud. This can involve opening credit accounts in another person’s name, filing false claims for medical services, or impersonating someone else to commit fraud.
Each of these categories represents a specific aspect of fraudulent activity that Colorado law seeks to address, reflecting the state’s commitment to protecting its citizens and maintaining integrity in both personal and commercial transactions.
Legal Implications and Penalties
The penalties for these criminal activities depend on the specifics of the crime but range from low-level misdemeanors to serious felonies. Sentences can carry serious consequences, including jail time and fines, not to mention the long-term impact on the perpetrator’s reputation and future opportunities. Typically, the more money or the greater value of the goods involved will increase the severity of the crime and sentence.
Preventative Measures
To avoid the escalation of contract disputes into criminal charges, parties must engage in transparent and honest dealings from the outset. Proper documentation and clear communication are key. Both parties should thoroughly understand their contractual obligations and seek legal advice if there is any ambiguity or concern about the terms.
While most contract breaches in Colorado remain within the civil jurisdiction, introducing elements like fraud and theft can quickly shift a matter to criminal court. Understanding the distinction between a mere failure to fulfill contractual obligations and actions that constitute a crime is crucial. If you’re navigating such waters, professional legal counsel can provide the necessary clarity and support.