Contracts set out the legal responsibilities and rights of parties who voluntarily enter into them. A breach of contract happens when one of the parties violates a promise that underlines the contract. Different types of breaches of contract may apply. The person who did not breach the contract may be able to ask for a variety of legal remedies from the court.

Types of Breaches

In some jurisdictions, a breach must be considered material for the party who didn’t breach the contract to receive legal relief. A material breach is one that is substantial to the agreement that it seriously affects the contract when it is committed. In contrast, a minor breach is one in which a party fails to perform a small aspect of the contract but does not violate the complete agreement. The parties can still continue with the contract. When a material breach occurs, the other party is no longer expected to fulfill his or her contractual obligations and can seek a legal remedy from the court.

There is also a difference between an actual breach and an anticipatory breach. In an actual breach, a party does not fulfill his or her contractual obligations. Anticipatory breach happens when the party indicates through their words or actions that they do not plan to fulfill their contractual obligations.

Some examples of a breach of contract include:

  • Not paying rent when it is due
  • Not delivering a good that was ordered
  • Not paying for a service when it is received
  • An item was substituted for a different item that was ordered
  • Contractual obligations are not fulfilled by the due date

Legal Remedies for Breach of Contract

If a person breaches a contract or there is an anticipatory breach of a contract, several legal remedies may be available, including:

  • Compensatory damages – These are money damages given to the party who did not breach the contract and represent the losses they sustained.
  • Rescission – Rescission is a canceling of the contract.
  • Reformation – This remedy changes the contract so that the inequities the party who did not breach the contract suffers are addressed.
  • Specific performance – This legal remedy requires the party who breached the contract to carry out the contract.
  • Damages specified by the contract – In some situations, the damages may be specified in the contract, such as the payment of a defined sum of liquidated damages.

 

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