Breach of Contract



In the investment context, contracts can be formed between an investor and an advisor in writing, orally or even be implied from the circumstances. The written documentation prepared by an advisor and signed by the investor constitutes a written contract that contains certain implied terms and conditions—i.e. an implied condition of good faith and fair dealings. However, an oral contract can also be formed between an advisor and the investor—“I will always put your interests first,” “I will not invest in high risk stocks,” “You will only be invested in [Fortune 500 companies][domestic companies], etc.” These representations may form the basis of a contract, and when they are not honored, the broker may be liable for violating his or her promises. This would be a breach of contract.

Breaches of contract, especially oral contracts, may be difficult to prove; however, this does not mean that they do not exist or that they are less important than a written contract. A valid oral or implied contract is just as enforceable as a written contract. If you discover that your investment advisor is not investing your funds as previously agreed or that he acted in a manner not consistent with what you understood the relationship to be, the advisor may have breached an oral or implied contract. You should seek competent legal advice immediately.