Breach of Contract Law: Everything You Need to Know
Breach of contract law stipulates that a breach of contract happens when one of the parties to the contract fails to live up to his part of the agreement. 3 min read
Updated November 19, 2020:
Breach of contract law stipulates that a breach of contract happens when one of the parties to the contract fails to live up to his part of the agreement. A breach of contract varies in severity and can be partial, material, anticipatory, or fundamental. For a court to accept to hear a breach of contract case, the aggrieved party must prove the following:
- The contract in question is valid.
- The contract was breached.
- The aggrieved party has lived up to his part of the contract.
- The breaching party was informed of the breach.
Levels of Breach of Contract
Contracts are signed with the intention of reducing the possibility of future misunderstandings. Because of some changes in the circumstances or financial affairs of the parties to the contract, one party may fail to live up to his expected terms in the agreement. This is called a breach of contract. Contract breaches vary in severity. There are four basic types of breach of contract scenarios:
- A Minor or Partial Breach: This involves the breach of some terms of the agreement. A partial breach does not excuse the aggrieved party from living up to his side of the bargain.
- An Anticipatory Breach: An anticipatory breach is one that has not happened yet. Instead, one of the parties to the contract suspects that the other party will soon breach the contract. An anticipatory breach is very hard to prove in court.
- Material Breach: A material breach is a serious violation of the contract and may relieve the aggrieved party from fulfilling his part of the bargain. An example is when one of the parties fails to pay for the goods or services provided.
- Fundamental Breach: A fundamental breach of contract is one of the most serious contract violation levels. In such a breach, the aggrieved party can sue and get damages. An example of a fundamental breach is when a person buys a house and, on coming to occupy it, finds out that the house is being occupied by another family to whom the property owner subsequently sold it.
Conditions for Courts Taking Up Breach of Contract Lawsuits
Courts have standards for hearing cases involving breach of contract violations. In many states, there are four main conditions that have to be fulfilled for a court to accept to hear a breach of contract lawsuit:
- The contract should be valid. The aggrieved party must prove that the contract in question is legal and meets all the requirements of an enforceable contract.
- The aggrieved party lived up to his end of the deal. The person aggrieved by the breach of contract must prove that he has fulfilled his side of the contract for the lawsuit to be taken up by most courts.
- The contract was breached. The aggrieved party must present evidence that the whole contract or part of the contract was actually breached.
- The offending party was informed of the breach. Before seeking the intervention of the court, the aggrieved party must inform the offending party of the breach. This should be done in writing, ideally.
Common Defenses in Breach of Contract Lawsuits
When an entity is sued for breach of contract, there are several defenses available:
- The contract was signed under coercion or deception. The sued party might argue that he was coerced or deceived into signing the contract against his will. Some entities claim that the other party to the contract had undue influence on them. All of these defenses, if true, are grounds for a court to declare the contract unenforceable.
- A mistake was made when signing. A party accused of breach of contract can claim that a mistake was made during the signing, voiding the contract.
How Courts Solve Breach of Contract Lawsuits
Courts have many options in dealing with proven breach of contract violations:
- Issuing court orders. The court may give an order obligating the party that breached the contract to fulfill its side of the contract. This is normally the case for minor or partial contract violations.
- Awarding damages. The contract may award monetary damages to the aggrieved party. Courts can award general damages, punitive damages, and nominal damages depending on the circumstances of the lawsuit.
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