A breach of contract claim can be brought when a party to a valid contract has failed to fulfill their side of the agreement. Contracts can be breached in various ways, like failing to fulfill obligations outlined in the contract or doing something the contract prohibits.
Contract breaches generally fall into three categories: anticipatory, material, or minor. Understanding the difference between these breaches and your rights and remedies is important, even when the breach is minor.
However, you should keep in mind that minor breaches can generally be resolved outside of court, and there are some defenses another party could assert during a minor breach of contract lawsuit.
How is a Minor Breach Different from Material and Anticipatory Breaches?
To understand the differences between breach types, you need to get a grasp on what each means and how the different breach levels affect contract performance:
- An anticipatory breach is when one party becomes aware that the other party will not hold up their end of the contract. This could be verbal, through a firm refusal to honor the contract (“We will not sell our product to you”) or by apologizing because the party is going to be unable to complete the contract (“We are sorry but our source of supply for making our product has closed down and we will not be able to produce what we contracted to by the time that performance is due.”
- It could also be done by committing an action that makes it impossible to complete the contract (e.g., one part shutting the doors of its business) or where the subject matter of the contract becomes unavailable (the party contracted to sell it to the other party, but instead sold it to someone else). The “non-breaching” party can decide to terminate the contract in these situations.
- A material breach is when the contract violation is so serious that it prevents the parties from being able to carry out the contract at all. This is often referred to as a fundamental breach of the contract. As its name implies, a material breach is a serious violation of the terms of a contract. In other words, the purpose of the contract may be completely wiped out when a material breach occurs.
- Thus, the non-breaching party is excused from having to perform their portion of the contract and is free to seek legal remedies to recover in court for the harm done by the breach. An example is if one party purchases a house from the other. If the buyer stands ready to fulfill its terms of the bargain – completes all of the necessary paperwork and offers the seller a check at closing – but the seller refuses to give up the deed and keys to the house, then this would be considered a material breach of contract.
- A minor breach of contract occurs when one of the parties substantially performs or meets the essential obligations of the contract but does not fulfill a minor condition. A minor breach will not affect the overall purpose of the contract. When a minor breach occurs, the other parties to the contract can otherwise fulfill any remaining contractual obligations despite the breach. Minor breaches may also be referred to as partial breaches.
Consider the following example to help illustrate the differences between forms of breaches: If you hire a painter to paint your house by May 1, and the painter changes their mind and tells you on March 1 that they will no longer paint your house, that is an anticipatory breach (breach before the time has come to deliver on the contractual promises.
If your contract states that the painter will use a specific shade of blue paint by Brand X, and the painter never shows up to paint your house, this would be a material breach of contract because the whole purpose of the agreement was destroyed. On the other hand, if the painter used the correct shade of blue but a different brand of paint because the specific brand was unavailable, this would likely be a minor breach of contract.
Can I Bring a Lawsuit Even if the Contract Breach is Minor?
Even if you have suffered a minor breach of contract, you may have grounds for a lawsuit. However, this is limited to situations where you suffered damages due to the minor breach. Naturally, damages will be more limited to minor than material breaches. If the painter fails to show up, and you have paid for the job already, then you are owed all the money you have paid so far. If your house gets painted but with a paint designed to last 8 years instead of 10, your damages are 80% of the contract – the 20% that won’t be covered for the length of time you had contracted for.
When a minor breach occurs, bringing a whole lawsuit is often unnecessary. Look at the contract to see if it lays out steps for settling a dispute, like going to mediation or arbitration before filing a lawsuit. The terms of the contract will usually govern any dispute that arises.
Remember that just because a minor breach occurred does not mean you will not be expected to complete your obligations under the contract. Non-performance is only permitted for material breaches. For example, in the last scenario above you would have to pay the painter for the work that was actually performed (80%) because the painter still painted the house mostly according to the contract terms. Using a different brand of paint in an identical color did not affect contract completion.
What Damages are Available for Breach of Contract?
Some examples of monetary damages include:
- Restitution: Restitution restores an injured party to the position they were in before a contract was ever formed
- Liquidated damages: Liquidated damages are a pre-set amount set by the parties in advance. They are meant to reflect an estimate of the damages a party would suffer should a contract breach occur.
- Nominal damages: Nominal damages: are essentially symbolic and are awarded when no true harm results from the breach of contract. Nominal damages can be as low as one dollar
What Defenses are Available for a Minor Breach of Contract?
The breaching party may have some defenses in a minor breach of contract case. For example, the party could claim that no damages resulted – no harm, no fault.
Also, if the non-breaching party failed to perform their duties under the contract after the minor breach, this could be raised in court to show a mutual breach. Using the earlier example, if you failed to pay the painter just because it was a different brand of paint and then sued the painter for breach of contract, the painter could defend themself by showing that you didn’t make payment, which was greater damage.
Should I Consult an Attorney About Minor Breach of Contract Issues?
You should first try to settle a dispute over a minor breach of contract outside of court. However, you should contact a local contract attorney if you cannot resolve the dispute or are unsure if the breach was minor or material. An attorney can explain your rights under the law and help formulate a plan to remedy the breach and possibly collect damages owed.