In breach of contract damages cases, one of the parties involved in a contract has breached the terms and the other is suing for damages related to losses that resulted from that breach.

Elements of a Valid Contract

Before you can claim that a contract was breached, you must have a valid legal contract that has been agreed to by all parties. Contracts don't have to be written to be legal or enforceable as the court system can enforce oral contracts.

Before you can prove that a contract exists and is valid, you must establish three main elements:

  • Offer: One party offers to provide services or goods to the other party in exchange for something that is valuable. The parties must also intend to enter into a contract or agreement.
  • Acceptance: The offer must be accepted by both parties, which includes the terms for how the services or goods will be exchanged for something of value. It is easier to outline the terms of acceptance in a written contract as the document includes specifics on which both parties agree.
  • Consideration: All parties involved in a legal contract must have something to gain by entering into the agreement. If one party makes a promise to provide a service or good to another but the contract doesn't specify anything that will be given in return, this situation is more like a gift. A gift cannot be legally enforced.

Breach of Contract

If any involved party in a written or oral contract fails to complete the tasks or perform on the terms outlined, that party could be found to be breaching the contract.

Breach of contract can happen in several ways, such as:

  • Failing to complete a job
  • Providing inferior services or goods
  • Failing to deliver services or goods
  • Failing to make payment on time

When a contract is breached, one party has broken a promise to provide something or perform a task. Failing to perform the terms outlined in a contract is not justifiable. When you violate the terms, either by failing to perform or interfering with the obligations of the agreement, you will likely be found to be in breach of a contract. This situation can happen in a variety of ways and is one of the most common reasons for lawsuits in American courts.

Contract laws provide various remedies for all different types of breaches to help make the non-breaching party whole and recover any losses. When a court orders the breaching party to pay damages or perform other remedies, this action isn't meant to punish that individual or company. Instead, legal remedies for breach of contract are designed to bring the non-breaching party back to the previous status that would have been had the breach not happened.

Partial Breach of Contract

A partial breach of a contract is when one party fails to provide or perform on one contract provision. When a partial breach occurs, the non-breaching party can still take legal action but can only sue for actual damages.

For example, a property owner hires a company to install a water fixture in the backyard. When hiring the company, the property owner shows the type of liner that should be installed beneath a layer of sand in the pond. The liner shown to the contractor was black, but the contractor installs a blue liner with the same thickness and design beneath the layer of sand. Although the contractor may have breached the specific terms, this likely wouldn't be considered a breach of contract because the liner is not visible and doesn't impact the functionality of the pond.

One option for the property owner would be to request a refund in the price difference between the blue liner that was installed and the black liner that was requested. However, if the price for each liner was the same and since the color of the liner doesn't impact its functionality, the property owner wouldn't be able to sue for any actual damages.

Material Breach of Contract

If one party fails to perform the obligations outlined in the terms in a way that destroys the contract's value, the breaching party could be liable for damages. In the previous example, if the contractor used a layer of thin plastic that wouldn't last as long as the black liner or wasn't designed for use beneath a pond, the property owner could sue for damages. The amount would likely be what it would cost to take out the incorrect materials and replace the liner.

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