A contract is a legal and binding promise between two or more parties. If any party involved in a contractual agreement fails to fulfill his obligations or complete his part of the agreement on time or as defined in the agreement, it’s known as a breach of contract. If there is no justifiable or lawful reason for the party to fail in meeting the requirements agreed to by all parties, the contract is breached.
The 4 Main Types of Contract Breaches
There are many details and complexities involved in creating and upholding a contract, but generally, contracts are legally binding, so each party involved has legal recourse if a breach takes place. There are typically four types of contract breaches:
- Minor breach. Sometimes referred to as a partial breach, a minor breach occurs when one party violates a portion of the contract but not the whole thing. The infraction must be so insignificant that all parties involved in the contract can still meet any outstanding obligations. For example, if Company A hires Company B to put a new roof on its building, Company B may get the job done on time, but there may be a lack of uniformity in the appearance of the shingles or the nails were overdriven or placed in the wrong locations. Company A likely can’t sue for non-performance because the job was completed by the due date. However, it could make the company fix the problem or sue for monetary damages.
- Material breach. Sometimes referred to as a total breach, a material breach is considered the most serious because one party failed to perform the duties detailed in the contract. Thus, the breach is so significant, the purpose of the agreement is determined to be completely broken. Because the non-breaching party did not receive any benefit from the agreement, it allows the non-breaching party to disregard the contract and sue for damages.
- Anticipatory breach. Also referred to as anticipatory repudiation, this type of breach occurs when one party knows the other party won’t fulfill the terms of the contract on time. It allows the non-breaching party to claim a breach of contract. For example, if Company A hires a painting firm to paint the inside and outside of its new 10-building apartment complex by August 1, and the painting firm hasn’t started the job by July 31, Company A can sue for damages because the painting firm can’t complete the job by the date defined in the contract.
- Fundamental breach. This type of breach is similar to a material breach. It occurs when one of the parties involved in the contract fails to complete an obligation that was so critical to the agreement, the other party can’t complete its responsibilities in the contract. The non-breaching party can then cancel the contract completely.
The damages available for a breach of contract depend on the type and severity of the breach but may include compensatory damages, restitution, punitive damages, and specific performance. Compensatory damages pay the non-breaching party enough money to receive what was promised under the terms of the contract and are the most common legal remedy in this type of case.
Contact Becker Law LLC
No matter what type of contract breach you face, Becker Law LLC can help. If a party involved in one of your business legal contracts has not met or refuses to meet its obligations outlined in your agreement, contact Steven Becker. He will leverage his many years of experience to represent you in your breach of contract dispute. Contact us today to discuss your situation.