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What is a Breach of Contract?

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What Is a Breach of Contract?

A contract is a legally enforceable agreement between two parties. Each party to a contract promises to perform a certain duty or pay a specified amount.

A breach of contract means one party to the contract fails to fulfill her contractual obligations. A breach can occur if a party fails to perform within the time frame specified in the contract, does not perform in accordance with the terms of the agreement, or fails to perform whatsoever. If one party fails to perform while the other party fulfills her duties under the contract, the performing party is entitled to legal remedies for breach of contract.

Types of Breaches

There are four different types of breaches of contract:

Actual Breach v. Anticipatory Breach

Most breaches of contracts is one of two types: actual or anticipatory. Actual breaches occur when a party fails to fulfill her obligations on the date performance is due, or when a party performs her obligations and the other party refuses to perform.

Anticipatory breach occurs when a party refuses to perform her obligations under the contract before the due date of performance. For example, if a party agrees to sell her car to a buyer in five days, but then reneges on day three, she is anticipatorily breaching the contract.

Minor Breach v. Material Breach

A contract breach can either be minor or material. A minor breach, also known as a partial breach, is a failure to complete a minor, non-essential part of a contract. Although it is technically a breach, the contract can still be completed.

A material breach, on the other hand, is a substantial breach in contract terms usually excusing the non-breaching party from performing and giving her the right to sue for damages. For example, in a home purchase contract, a seller refusing to give the buyer the keys to the home after the buyer has completed all contract terms is a material breach.

Oral v. Written Contracts

Generally, both written and oral contracts are legally enforceable; notwithstanding, it is best to memorialize your contract in writing in case there’s a dispute about the terms of the agreement. Moreover, there are certain contracts that must be in writing to be enforceable, including:

  • Contracts involving the sale or transfer of land;
  • Promises to pay someone’s debt obligations;
  • Contracts that cannot be completed within one year of its making;
  • Contracts involving the sale of goods for more than $500; and,
  • Contracts that will go beyond the lifetime of the one performing the contract.

Remedies for Broken Contracts

There are several remedies for breach of contract: 

  • Compensatory Damages: The most common legal remedy, compensatory damages are a monetary award to compensate the aggrieved party. A court can order the person who breached the contract to pay the aggrieved party enough money to get what they were promised by the terms of the contract.
  • Restitution: A court orders restitution if they order the breaching party to pay back the other person the amount the aggrieved party paid initially to make the aggrieved party “whole” again.
  • Punitive Damages: If the breach of contract is especially heinous, a court may order punitive damages, meant to punish the breaching party for breaking the terms of the contract.
  • Specific Performance: A court can force the breaching party to perform the service or deliver the goods that were promised in a contract.

Why Should I Consult with an Attorney?

Contract law can be complicated, and every state has different lawsuit filing procedures and deadlines for breach of contract claims. Speaking with a knowledgeable business attorney can help determine what remedies are available to you. The above remedies can be attained by working with a knowledgeable contract lawyer.

Photo of page author Erin Chan Adams

, LegalMatch Legal Writer

Last Modified: 05-01-2018 10:46 PM PDT

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