Breach of Contract Explained

When one party fails to fulfill their obligations under a contract, it is called a breach of contract. Breaches can range from minor delays to complete failures to perform, and the legal consequences depend on the nature and severity of the breach. Understanding the basics can help you know where you stand if a deal goes wrong.

Not all breaches are treated equally. A minor breach, sometimes called a partial breach, happens when one party fails to meet a secondary obligation but still substantially performs. For example, a contractor who finishes a project a few days late but completes all the work has likely committed a minor breach. The other party is generally still required to perform their side and can seek damages for the specific harm caused by the delay.

A material breach is more serious. This occurs when the failure goes to the heart of the agreement, depriving the other party of the main benefit they expected. If a supplier fails to deliver critical materials at all, that is likely a material breach. In these cases, the non-breaching party may be excused from their own obligations and can pursue more significant remedies.

An anticipatory breach happens when one party indicates in advance that they will not perform. If a vendor tells you a month before the deadline that they cannot fulfill the order, you generally do not have to wait until the deadline passes to take action. You can begin pursuing remedies right away.

Remedies for breach typically include monetary damages meant to compensate for losses caused by the breach. In some cases, courts can order specific performance, requiring the breaching party to fulfill the contract as written. This is more common with unique goods or property. Some contracts also include liquidated damages clauses that set the penalty amount in advance.

If you believe the other party has breached a contract, or if you are accused of a breach, documenting everything is important. An attorney can evaluate the situation and explain your options.

This article provides general information only and is not legal advice.

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This article is general information, not legal advice. It does not create an attorney-client relationship.