Types of Contract Breaches

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The breach of a contract is defined as one or more parties involved in a contract do not honor a binding agreement.

There are four types of contract breaches recognized by the law today:

  • Minor breach
  • Material breach
  • Fundamental breach
  • Anticipatory breach.

A minor or partial breach is when the non-breaching party of the contract is not entitled to an order for performance of its obligations but only to collect the damages for which they are owed. For instance, if a homeowner hires a contractor to install new windows in a home and asks for wind resistant windows but the contractor uses windows that aren’t wind resistant the homeowner will ask the contractor for damages incurred. Since there is no difference in value between the two windows, the homeowner will not be awarded any damages. If there was a difference between the two windows then the homeowner would have been awarded damages that amount to the difference between the two windows.

A material breach is when there is a failure to perform a part of a contract that permits the other party of the contract to ask for damages because of the breach that has occurred. For example, if the contractor mentioned above uses windows that aren’t wind resistant and the windows break, the homeowner can collect damages for replacing the windows with the wind resistant ones. The following, as defined by the Restatement of Contracts, must be present to determine whether or not a material breach has occurred:

  • The extent to which the injured party will be deprived of the benefit which he reasonably expected
  • The extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived
  • The extent to which the party failing to perform or to offer to perform will suffer forfeiture
  • The likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances
  • The extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.

A fundamental breach of a contract is when the person that has had the contract breached against can sue the breaching party for damages incurred as well as terminate the contract if they wish to do so.

An anticipatory breach of a contract is when the non-breaching party realizes that the other party of the contract will fail to perform his or her part of the contract in the future and can terminate the contract and sue for damages before the breach happens.

In the majority of cases involving the breach of a contract, the damages awarded to the non-breaching party is typically in the form of money. In some instances, a judge can award an injunction or specific performance when monetary compensation for a breach of contract does not settle the breach effectively. Punitive damages are not awarded in a breach of contract in the United States but they may be awarded for other causes of action in a lawsuit.

Anyone that has had a contract breached against them should consult legal help immediately to protect their rights in a court of law. A contract law attorney will be able to answer any questions that a non-breaching party or a breaching party has regarding their breach of contract case. A contract law attorney will also be able to describe, in detail, how the party should go about defending their case or proving their case for damages to be awarded.

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