Consequence of Breach of Contract

The consequence of breach of contract could be significant depending on what type of breach occurred, and how much the injured party suffered due to the breach. A breach of contract occurs when one of the parties to the contract otherwise fails to perform under the agreement for no lawful reason.

A breach of contract is the most common type of contractual dispute. An example of a breach would be if one party, a painter, agrees to paint someone’s home for a specified amount. However, halfway through performing, the painter simply stops painting the home for no justifiable reason. The painter has officially breached the contract. The homeowner can now bring a lawsuit against the painter due to the breach.

Contractual Obligations

Parties entering into a contract have a contractual obligation to perform under the contract. Whether performance means physically performing some sort of service, selling goods, or paying for the service or goods, the duty to perform under the agreement becomes a legal duty. A breach of contract might occur in any of the following circumstances:

  • One of the parties failed to perform
  • One of the parties only partially performed
  • One of the parties failed to perform on time

Different Kinds of Breaches

There are different types of breaches, which could affect what type of remedy is available to the injured party. These include the following:

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

Material Breach

material breach occurs when one of the parties to the contract fails to perform under the contract, and the injured party suffers significantly. In this case, the court will provide the greatest remedy to the injured party to make them whole again. An example of a material breach would be if one party was required to make 10 payments of $100, but only made a total of 5 payments. A lawsuit can be brought for specific performance, which if approved, will require the breaching party to continue making payments as required under the contract.

Fundamental Breach

A fundamental breach occurs when, at the time of performance, the other party acts in a way that renders performance on your end unattainable. For example, assume you enter into a lease agreement with the owner of an apartment. But, on the day you are expected to move in, someone else is still residing in the apartment. The landlord has fundamentally breached the contract, leaving you unable to move in. Therefore, you can bring a lawsuit against the landlord and force performance under the contract. This means that the landlord will have to rent the apartment to you and force the current resident out of the apartment.

Anticipatory Breach

Anticipatory breach occurs when it is anticipated that the other party will not complete the job in time. For example, let’s assume that you hired a painter to paint your home by July 1. On June 30, you can bring a lawsuit against the painter for anticipatory breach because it is highly unlikely that the painter will complete the job by July 1.

Minor Breach

A minor breach is a partial breach of contract. A partial breach occurs when a minimal portion of performance isn’t satisfied. For example, let’s assume that you were supposed to receive 50 applies from a farmer, but he only delivered 49 apples. This wouldn’t constitute a material breach, but rather a minor breach. While you can’t sue for damages, you could sue for monetary damages or force the farmer to deliver the one remaining apple to you.

Verifying Breach of Contract

Before you bring a breach of contract claim, you’ll have to verify whether or not a breach actually occurred. You should consider the following when determining whether you believe that the other party breached the contract:

  • Whether there was a valid contract in place between both parties
  • Whether the contract was actually broken
  • Whether you lost money as a result of the other party’s breach
  • Whether or not the other party was responsible for the breach, i.e., was the breach intentional?

If you need help learning more about the consequences of a breach of contract, or if you need to speak to an attorney regarding a potential contractual dispute, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.