The legal term “Breach of Contract” refers to the non-compliance or violation of an agreement or a contract. The breach of a contract occurs when one of the involved parties doesn’t fulfil the terms specified in the legally binding document that they signed.
A contract, whether oral or written, will terminate once the parties have fulfilled their obligations. It also may happen that one of the parties does not completely fulfil the terms agreed and this is one of the most common causes of disputes in courts. The most common failures that will result in a breach of contract are failures in payments, deliveries, and completion of the job.
How is a contract broken?
Before a breach of a contract can be upheld by a court, it has to meet certain requirements:
- The contract must be valid, containing all of the requirements of a contract for the legal jurisdiction in which it operates. If the contract doesn’t meet the essential elements, there can be no lawsuit.
- The plaintiff must have accomplished everything that is required of them in the agreement.
- The party that is suing for breach of a contract must be able to prove that the defendant did indeed breach the contract’s terms.
- The suing party has to previously notify the defendant of the breach of the contract. This has to be done before proceeding with a lawsuit. The written notification will also function as proof.
For any type of contract breach, the plaintiff will need to establish certain facts that will build a case that allows them to take the breach to court. The verifiable items should be:
- The existence of the contract
- The proof that the contract has been broken
- The defendant’s responsibility for the plaintiff’s loss of money.
What are the different types of breaches?
A contract is a legally binding resolution that two parties agree on. Each one of the parties promises to pay certain amounts or perform specific duties for a certain item or service. As a legally binding document, each party has legal recourses in the event of a breach. The violation of a contract occurs when the obligations of either party are not upheld.
The breach could be a result of failure to complete and obligation in a certain time frame, not meeting certain terms of the agreement or even complete failure in performance. When one of the parties fails and the other party accomplishes their duties, the latter is entitled to seek legal remedies for breach of a contract.
There are three principal types of contract breaches:
- Minor Breach: This type of breach occurs when one of the parties fails while performing a part of the contract, but doesn’t neglect the whole contract. A minor breach must be non-essential so all the involved parties are still able to fulfil any other remaining contractual obligation. This breach is sometimes also referred to as an impartial breach.
- Material Breach: A material breach of a contract is a substantial breach. This means that the breach damages the contract as a whole. The purpose of the contract must be rendered completely defeated by some manner of non-compliance. Sometimes this is referred to as a total breach. In this case, the plaintiff is allowed to disavow their own contractual obligations.
- Anticipatory Breach: This type of breach occurs when one of the involved parties has been informed by the other party about the incompliance of the terms of the contract. This communication can be either verbal or written. The party that receives the notification is able to claim a breach of a contract and pursue a remedy.
Common Defenses to a Breach of Contract Lawsuit
The defendant, meaning the party being sued for breach of contract, has the right to offer a reason why it should be excused. The common defences against a breach of a contract are:
- Fraud: The defendant presenting this will state that the contract isn’t valid because the plaintiff has made a false statement about an essential fact or has disclosed important information. Fraud should be established by the defendant as deliberate.
- Duress: This invalidates the contract by establishing that both parties didn’t sign the contract by their own free will.
- Mistake: If the defendant proves that both parties have made a mistake in regard to the subject of the case, this can sometimes be sufficient to invalidate the contract.
Remedies for Breach of Contract
Different types of breaches will result in different types of remedies available to the plaintiff. Generally, the most common monetary remedies include:
- Compensatory Damages: These remedies compensate the plaintiff for their losses. It’s one of the most common legal remedies. The plaintiff may receive enough money to get what it was initially promised within the contract´s terms from the defendant.
- Consequential and incidental damages: Such damages usually awarded when the signed or accepted contract had previously awareness of potential losses in case of a breach.
- Punitive Damages: These remedies often accompany compensatory damages. The purpose of these remedies is to punish the defendant when the behaviour towards the plaintiff has been intentionally negligent.
- Attorney’s fees: These fees can be recoverable as damages in cases in which they have been included beforehand within the signed contract.
There are also situations in which the money is not the only asset involved in the breach. For these cases, there is also a common list of remedies that include:
- Specific Performance: This is a legal remedy that requires the defendant to uphold the obligations within the contract that they failed to fulfil. However, this remedy is not always available if the breach is time-sensitive.
- Rescission: This initiates the cancellation of the contract and the reimbursement of the money.
Usually, the options for remedies are included in the initial contract. Before taking any legal action in the case of a breach of contract, it’s useful to review the initial contract and find all the limitations or requirements in order to avoid unintentionally waiving contract remedies.
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