Different Types of Breach of Contract
Knowing the different types of breach of contract can help you in the event that a breach occurs or to help you prevent being the one to breach a contract.3 min read
Knowing the different types of breach of contract can help you in the event that a breach occurs or to help you prevent being the one to breach a contract. A contract lays out the terms and conditions that both parties have agreed to. In essence, a contract is a promise to perform specific actions.
Written and oral agreements are types of contracts. They can even be a combination of the two. The contract will outline both the rights and responsibilities of each party and the offer and acceptance being agreed on. Contracts are both legally and equitably enforceable in a court of law.
What Is A Breach Of Contract?
A breach of contract is a failure of either party to fulfill the terms of the agreement without a lawful excuse not to. Various types of contracts come up throughout your daily life. These contracts can include such agreements as:
- Car repair.
- House remodeling.
- Home purchase.
- Credit card agreements.
- Bank loans.
With each of the above agreements, there is a promise performed by one party in exchange for money. If the party fails to provide the service or produce the product or the other party fails to pay, then a breach of contract has occurred.
There are multiple remedies that a business can seek when a breach of contract has occurred. In most cases, the affected party will send a demand letter to the party that breached before initiating a lawsuit. If the demand letter goes unanswered, then the affected party can initiate a lawsuit to request payment for damage due to the violation. Damages can include the cost for the work or service as well as legal fees associated with trying to collect payment.
Whenever a breach of contract has occurred, it is important to discuss it with a lawyer to determine what course of action is best depending on the circumstances.
A breach of contract can take many forms including:
- Failure to provide services or provide them on time.
- The receipt of defective goods or work.
- Nonpayment for goods or services.
- Warranty breaches.
Types of Contract Breaches
There are four primary types of breach of contract that can occur. These types include minor, fundamental, material, and anticipatory.
- Minor - A minor breach of contract, also referred to as a partial breach, occurs when one party failed to perform a part of the contract even though the service or product was delivered. For example, you can contract someone to design your website. If they complete it by the date, they have fulfilled their delivery but if it contains errors you can file suit to have the changes corrected.
- Fundamental - A fundamental breach is a serious issue that can result in the contract's termination as well as a suit for damages. In this type of breach, the offending party failed to complete a portion of the contract that was a fundamental part of the other party being able to meet their responsibilities. An example would be signing a lease for an office space and finding that the workspace is currently occupied by another business.
- Material - A material breach of contract is also considered a severe breach and occurs when either party fails to perform their required duties. When this occurs, the non-breaching party will no longer be required to keep up their end of the contract and are able to seek damages. An example would be a client failing to pay a contractor for work already completed and submitted.
- Anticipatory - An anticipatory breach occurs when a party makes a broken contract claim even if the actual breach hasn't happened yet. This means that one party knows that the other party isn't able to perform the contract under the agreed upon terms. This can also occur when a party states that they will no longer be able to or no longer want to perform the duties under the contract. An example of this type of breach would be a designer agreeing to complete a project by November, yet by October 31 no work has been started yet.
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