Types of Breach of Contract: 5 Common Breaches of Contract

In a perfect world, parties to a contract would come to an agreement, and they would be pleased with the outcome. Unfortunately, our world is not all sunshine and rainbows. Unexpected events such as financial problems cropping up or delays happen every day. Such challenges make it hard for some parties to a contract to honor their word or fulfill their obligations as outlined in their agreements.

As much as the hardships we go through make it hard for us to perform the terms agreed in our contracts, we have to make sure that we fulfill our obligations because we are legally bound to do so. Otherwise, if conditions of agreements are not adhered to, businesses would collapse, and industry operations would come to a grinding halt meaning that the affected party will go through pure economic losses.

Fortunately, the law of contract deals with such situations. It protects and enables brokers, buyers, employees, entrepreneurs, companies, business partners, or anyone entering into a legal agreement to seek redress in case there is a breach of contract. Business and contract law ensures parties who enter into a legally binding contract can protect their businesses and interests in case one of them fails to honor their word under their agreements.

 

What is a breach of contract?

A contract is said to be breached when promises are broken, and one of the parties fails to fulfill the terms of the contract without a lawful excuse. Lawful excuses for not honoring a contract include entering into a contract under duressmutual mistakes concerning vital terms of contractscontracts entered into through fraud, or contracts entered into with minors while under the impression that the minors have attained the age of majority.

In other words, contracts are said to be breached when one of the parties fails to deliver or keep their end of the bargain without a justifiable excuse. So, what are the types of contract breaches?

Sit back, buckle up, and relax as I take you through a bumpy ride of contract agreements fundamentals and the different types of contract breaches. With this knowledge, you’ll be armored to defend yourself in case of a contract breach. Remember, legal knowledge is your right.

 

Types of breach of contract

Business law or the law of contract recognizes the following types of breach of contract or consequences:

  • Minor breach
  • Material breach
  • Anticipatory breach
  • Fundamental breach
  • Actual breach

 

1. Minor Breach

Also known as a partial breach, a minor breach occurs when the breaching parties don’t violate the entire contract, but at the same time, they fail to perform part of what they had agreed when they entered into a contract with the non-breaching party.

For instance, if party A agrees with party B to deliver 1000 liters of milk to party’s B milk processing plant within 30 days and party A only delivers 800 liters of milk within the said days after some of his dairy cattle succumb to anthrax, party A has committed a minor breach of contract. It’s irrelevant that some of his dairy cattle died.

As we see, party A kept his word partially by delivering 200 liters shot of his agreement with party B. Therefore; party A committed a minor breach of contract.

 

2. Material Breach

Commonly known as major breaches, material breaches occur when parties to a contract end up getting something different from what they had contracted for. When a material breach occurs, the non-breaching parties aren’t required to fulfill their end of their bargain. They also have the right to seek a remedy or the right to be compensated by the breaching parties.

An example of a material breach is when Caleb, a client, enters into a contract with William, a web developer. The contract entails William upgrading and posting German cars’ spare parts advertisement banners on Caleb’s online shopping website for $100. If William does not upgrade the site and goes ahead and publishes energy drink advertisement banners instead of the spare part banners, William has committed a material breach of contract. For Caleb to be compensated for both direct and indirect losses, he must prove:

  • William did not act in good faith, even when correcting his mistake.
  • How badly William broke the terms of their contract.
  • How badly William’s breach of contract has affected his business’s image as well as his income.

 

3. Anticipatory Breach

Anticipatory breaches occur when one party realizes that the other party will not, or does not intend to fulfill the terms agreed upon in their contract even before the delivery or performance date arrives. The breaching party may notify the non-breaching party in writing or verbally. The non-breaching party may also realize the breaching party’s intentions through his actions. In this case, the non-breaching party will be awarded damages for the losses he/she has incurred, including finding suppliers at higher costs if their contract involved procurement services. The plaintiff can also ask the court to terminate the contract.

 

4. Fundamental Breach

A fundamental breach is a type of breach of contract where the aggrieved party can sue for damages if there is a breach. The non-breaching party can also terminate the contract if he/she wishes to even if the contract has uncompleted portions. By doing this, the non-breaching party completely cuts off connections with the breaching party.

 

5. Actual Breach

Actual breaches are the types of breaches that have already occurred. In other words, the breaching party is already in the wrong because he/she has not fulfilled his/her obligations by the due date, or the breaching parties have performed their duties improperly or incompletely.

 

What happens when there is a breach of contract?

When one of the parties to a contract alleges that there is a breach of contract, the non-breaching party may request the court to enforce the contract. To do this, he or she will need the help of an experienced business attorney or a diligent contract lawyer.

At BestLegalChoice, we have top breach of contract lawyers ready to assist you in getting what you deserve by initiating a civil lawsuit. Our business law attorneys are also experts at mediation and negotiation if parties to a contract wish to settle their dispute out of court. Our contract lawyers help clients resolve their dispute through the alternative dispute resolution process.

 

Remedies for different types of breach of Contract

As stated, there are different types of solutions available to aggrieved parties of a contract. The following are the main remedies available to non-breaching parties.

  • Specific performance
  • Damages
  • Restitution and cancellation

You can read more about breach of contract remedies.

Damages

The most common remedy offered by the courts is the payment of damages by the breaching party to the non-breaching party. The following are different types of damages provided by the courts:

  • Compensatory damages- these type of damages aim to restore the non-breaching party to the position they were in before or the position they would be in if the breach did not occur.
  • Punitive damages-these are damages the breaching party has to pay the non-breaching party. These damages are usually high than compensatory damages. They are meant to punish and deter the breaching party from repeating the same in the future.
  • Liquidated damages- these are the damages that were agreed upon by the parties to a contract while drafting their agreement. These damages state how much is to be paid in case there is a breach of contract. Liquidated damages should estimate actual damages in the event of a contract breach. When drafting a contract, ensure that the liquidated damages you agree on are reasonable.
  • Nominal damages- these damages are awarded when the non-breaching party doesn’t prove actual money loss, but he or she proves that there was a breach of contract.

 

Specific Performance

There are situations where damages aren’t adequate as a legal remedy. Such circumstances require the non-breaching party to seek specific performance. In specific performance, the courts order the breaching parties to fulfill their duties and obligations according to the terms of the contract agreed upon. Specific performance is awarded when courts are of the opinion that awarding damages will not restore or put the non-breaching party in the position they should be in if there wasn’t a breach of contract.

 

Restitution and Cancellation

Non-breaching parties may cancel their contracts and sue for restitution. As a contract remedy, restitution means that the non-breaching parties are restored to the position they were in before there were breaches of contracts. On the other hand, cancellations void contracts and frees parties of contracts from their obligations under their agreement.

 

Get legal representation for different types of breach of contract from top attorneys

If you find yourself in a breach of contract scandal or if you think that a party to a contract has failed to fulfill their obligations, the network of breach of contract lawyers at BestLegalChoice will gladly work with you to ensure that you get the justice you deserve. They can help resolve any and all types of breach of contract matters. To consult with one of our business or contract attorneys, post your request or call (800) 390-3293.

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