The difference between breach of contract and breach of warranty can be understood by looking at the different parts of legal agreements or contracts. Contracts are legal agreements made between two or more parties that designate the obligations required by each. A contract must contain an offer, acceptance, and consideration. If a party fails to complete their contractual obligations, it results in a breach of contract.

Breach of Contract

One type of breach of contract is a material breach, in which one party does something that contradicts their obligation in the agreement. An immaterial breach is one that is determined by the court to not have any significant effect on the contractual terms, such as a new car arriving with a minor scratch on it. When a breach of contract occurs, the parties may choose to have the contract enforced on its own terms or dissolved altogether and a new solution found. A breach must be proven to affect the very nature of the contract in order for it to be terminated.

A successful breach of contract claim will result in damages. If you pay someone to do a job and they don't do any part of it, the monetary amount you pay them is the monetary amount of your damages.

The first thing to do is to attempt to work it out directly with the other party - discuss, argue, and negotiate. If you can't make it work and if the amount of damages is small, you can file a claim in your area's small claims court. Each state has its own maximum amount that a small claims court can deal with, typically from $3,000 to $5,000, but occasionally more. Call your local small claims court to find out what the amount is.

Next, find out the legal name of the person or business you wish to file a claim against. Don't use the wrong name or you might end up with a judgment against the wrong person. Next, hire a lawyer to handle the case for you. Legal processes may be difficult to understand. If you accidentally don't comply or something goes wrong, you might lose your case. Acting "pro se" (in other words, handling your own case) is very risky and it's best to consult a lawyer beforehand if you wish to go this route.

State laws vary in the amount of time that a party has to file a breach of contract claim. Some states allow up to four years, while others allow even more time. Look up your state laws or talk to a contract law lawyer in your area. In general, it's best to act as quickly as possible.

Breach of Warranty

A warranty is a stipulation that a particular fact related to the subject of the contract is or will be as promised or stated. Warranties are meant to protect the recipient against loss, should the fact be or become untrue. For example, a warranty for a refrigerator may explicitly state that it will last for at least 15 years. This implies that the refrigerator will be fully functioning for that time. Warranties offer customers protection in numerous areas, including the quality and functioning of products, ownership of shares, and the right to intellectual property.

If a seller breaches a warranty, the customer has several options to remedy the situation, including:

  • If the buyer rejects unacceptable goods, or if the discrepancy reduces the value of the entire contract, the buyer may cancel the contract altogether.
  • The buyer may purchase substitute goods and recover the difference between the contractual price and the market price. If the buyer accepts the original goods, they have the right to monetary compensation (damages).
  • The buyer must provide notice of the breach within a reasonable time. Damages are measured as the amount between the value of the accepted goods and the value they would have had if they had been as warranted.

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