Types of Breach of Contract: Everything You Need To Know
A breach of contract is when terms of a contract are broken. It involves at least one of the parties in the agreement that who not keep a part of the deal. 3 min read
2. Breach of Contract Elements
3. Types of Remedies for Broken Contracts
4. Filing a Breach of Contract Claim
5. Legal Terms and Issues
Types of Breach of Contract
A breach of contract is when terms of a contract are broken. It involves at least one of the parties in the agreement that who not keep his or her part of the deal. The following are different types of contract breaches:
- Minor or partial breach: when one party doesn't do what the contract states he or she is supposed to do. You may be able to sue him or her, but only for “actual damages.”
Material breach: when one party doesn't do what it says on the contract, thus causing it to be destroyed and allowing that party to be liable for breach of contract damages. The following must be presented to see if a material breach has happened, according to the Restatement of Contracts:
- How badly the injured party is affected by the breach
- How much the injured party can be paid according to the contract's terms
- How badly the other party broke the contract's terms
- How likely the other party will be able to perform the failed terms depending on his or her circumstances
- How the other party behaves in good faith and fair dealing standards.
- Fundamental breach: when one party can sue the other party for breaking the terms, and potentially end the contract.
- Actual breach: when one party doesn't do what the terms said he or she was going to do by the due date.
- Anticipatory breach: when one party stops fulfilling his or her part of the deal, which makes the other party believe the agreed upon details will remain incomplete. Some examples of this include payment rejection, failing to give an ordered product, or making it apparent one or more parties can't or won't fulfill their part of the deal. The breaching party can be sued and the contract can be terminated by the other party.
Both actual and anticipatory breaches can waste time and money.
Breach of Contract Elements
You can claim a breach of contract if you have a valid contract in effect, either written or oral. Three elements can help determine if a valid contract exists:
- Offer: discussion and agreement that goods or services would be provided in exchange for something valuable. There must also be the intention to start a contract or agreement.
- Acceptance: agreement to said terms between parties, which can easily be proven through a written contract.
- Consideration: each party much have gotten something valuable from the other party to show a contract is being entered.
To win the lawsuit, you must show the other party's breaking of the terms caused great loss or damage to you. This includes money, opportunity, or time loss.
Types of Remedies for Broken Contracts
If you have experienced a breach of contract by another party, there are some ways to fix things. Compensatory damages are given to the non-breaching to cover losses. Two types of compensatory damages are available:
- Expectation damages may be able to cover what you were supposed to receive from the contract.
- Consequential damages usually cover indirect damage, such as failure to receive an oven for your bakery.
Filing a Breach of Contract Claim
You can send the other party a breach of contract letter, letting him or her know that you plan on suing if the issue is not resolved. This will wake up the other party and signal something needs to change to keep the agreement going. If a lawsuit is to be filed, you will need to provide a copy of the letter and any other corresponding documents to prove your case. You could file with small claims court, but if the contract includes high-value terms, it's best to talk to an attorney.
Legal Terms and Issues
- Actual Damages - This is money that helps compensate any money or properties lost because of the breach of contract. The amount awarded to you is based on proven harm, injury, or loss.
- Punitive Damages - This is awarded to you if you have experienced injury along with the actual damages. It's usually given if the breaching party's actions were intentional.
- Specific Performance - This is when the court orders the breaching party to complete his or her part of the bargain.
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