Most Unfair and Deceptive Trade Practice Act (UDTPA) claims in North Carolina arise out of a contract for goods or services. Accordingly, it is quite common to see UDTPA claims coupled with breach of contract claims.
In most cases, however, the addition of a UDTPA claim is improper, since a written contract governs the transaction. Contract law should, therefore, be the sole arena for resolution of such claims. This notion has been emphasized repeatedly by the 4th Circuit, the Business Court, and the Court of Appeals (e.g. - -- Broussard v. Meineke Discount Muffler Shops, 155 F.3d 331(4th Cir. 1998); Strum v. Exxon Co. 15 F.3d 327, 329 (4th Cir.1994); Media Network Inc. v. Mullen Advertising, Inc., 2007 WL 2570175 (NC Business Ct., Mecklenburg Co.).
The rationale is that once the parties have reduced their agreement to writing, those terms - and the applicable provisions of contract law - should control. Parties, when contracting, do so in order to define their obligations and, in turn, limit their liabilities. Doing so reduces the exposure to tort claims -- and treble damages -- provided by UDTPA and tort law. At least, it should.
Once a UDTPA claim is allowed to proceed, the threat of treble damages significantly alters the negotiation strategies of both parties. An innocent defendant is more likely to settle, for a higher sum, if facing the threat of treble damages. A marginal plaintiff, in turn, is more likely to push the case beyond a reasonable point, hoping to pressure the defendant into a higher settlement due to the threat of a large damage award that North Carolina law may not allow, but which the defendant may not be in a position to appeal. Despite the often harsh language with which the appeals courts treat the practice of "tacking" UDTPA claims on to ordinary contract claims, in many cases the UDTPA claim survives summary judgment, forcing the defendant into a pre-trial settlement posture disproportionate to the true nature of the plaintiff's claim.
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