Breach of Contract
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What Is a Breach of Contract?
A breach of contract occurs when one party does not adhere to their conditions listed in the agreement between two or more parties that outlines a specific exchange of goods or services. Parties can breach a contract either in whole or in part. Common examples of a breach of contract include:
- Not completing a project on time
- Not providing payment on time
- Not meeting the standards presented in the contract
- Not completing the project as outlined in the contract
Identifying a Breach of Contract
In order to prove there's been a breach of contract so that you can seek compensation, you must confirm the following:
- Contractual validity: Before you can bring your case to court, you must prove your contract is valid. This means it contains all essential elements specific to contracts in your state and was signed by all participating parties.
- Breach of terms: You must prove a breach of contract occurred.
- Plaintiff's terms: You have to complete all your obligations described in the contract.
- Prior notice: Prior to suing, you must give notice to the defendant regarding your intent to sue. You can do so verbally, but written notice is easier to use as evidence.
Types of Breach of Contract
A breach of contract can occur in different ways. Understanding the differences between the types of breach of contract can help you identify when it happens. There are four main types of breach of contract — anticipatory, actual, material, and minor.
Anticipatory Breach of Contract
In an anticipatory breach of contract, one party notifies the other to let them know that they won't be able to fulfill some obligation in the contract. This often gives both parties an opportunity to work through challenges and either create a new contract or consider legal action.
Actual Breach of Contract
An actual breach of contract happens when one party fails to perform an obligation as outlined in the contract. Minor and material breaches of contract are both subcategories of actual contract breaches.
Material Breach of Contract
A material breach of contract happens when one party receives less than what was promised in the contract or an entirely different product than what was promised in the contract. The failure can be due to lack of time to complete the project or simply not performing the work as outlined regardless of time constraints.
Minor Breach of Contract
A minor breach of contract is also known as a partial breach of contract or an immaterial breach of contract. Contract failures in this category relate directly to the deliverable. The receiving party gets the product or service, but it may be late or missing minor elements. In order to seek damages, the receiving party must prove that the breach of contract resulted in a financial loss of some kind.
Breach of Contract and Lawsuit
Usually, the first step after a breach of contract occurs is to try and remedy the situation through mediation of non-legal means. However, if this approach is unsuccessful, the wronged party might seek a legal remedy through a lawsuit. The amount of money in question will determine whether you can enforce the contract in small claims court or large claims court.
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Breach of Contract Remedies
When a breach of contract occurs, there are usually three general remedy options for the wronged party — damages, specific performance, and cancelation and restitution.
Damages
Damages, or payment, are the most common type of remedy for a breach of contract. Damages come in many forms and can depend on the industry, terms of the contract, and desires of the parties involved in the lawsuit. A few common types of damages include:
- Compensatory damages: This remedy attempts to repay the wronged party an amount that returns them to their financial standing prior to entering the contract.
- Punitive damages: These damages provide additional compensation to the wronged party for any pain or suffering. It's rare to see punitive damages applied to a breach of business contract, but it's not unheard of.
- Nominal damages: Usually, nominal damages are a small sum meant to compensate the wronged party for a partial breach of contract in which there was no financial loss.
- Liquidated damages: Some contracts list "liquidated damages" as part of the agreement. Should a breach occur, these are the damages awarded to the wronged party.
Specific Performance
The specific performance remedy involves the judge ordering the party at fault to complete a specific action, project, or obligation in place of damages. This is a rare remedy, and it is only used if monetary compensation could not replace or rectify the damage done through the breach of contract.
Cancelation and Restitution
Cancelation and restitution is a two-part remedy. First, the wronged party chooses to cancel the contract rather than seek specific damages. Then, they can sue the breaching party for restitution equal to whatever benefit the wronged party provided to the breaching party. Essentially, cancelation and restitution resets the wronged party to their financial state prior to the breach.
Breach of Contract Defenses
There are some defenses the breaching party can use if the breach of contract was out of their control. Common defenses include:
- Fraud: The breaching party can use the fraud defense if the wronged party misled them in some way during the contract negotiation and signing.
- Capacity: If the breaching party did not have the competency to enter a contract, either mentally or because they were underage when they signed, the judge can void the contract.
- Illegality: Contracts that outline illegal activity, such as theft, are unenforceable in a court of law.
- Mutual mistakes: Occasionally, the parties both misunderstood the intent or terms of their contract, leading to mutual mistakes or confusion.
- Duress: If the breaching party was forced into the contract under duress, the contract can be voided.
- "Dirty hands": This defense involves proving that both parties committed wrongdoing in the course of the contract.
- Statute of Frauds: Some states require contracts be in writing in order to be enforceable.
- Unconscionable contract: Sometimes, one party receives far more benefit from a contract than the other party. The judge can deem these contracts void.
Avoiding Breach of Contract
To avoid breaching a contract, it's vital you understand all the specifics and terms within the contract. During negotiations, ask any questions you have, double-check deadlines, and request any examples or clarity from the other party. Create a schedule for yourself to ensure you're meeting all deadlines and will have the final project delivered on time to avoid any contract breaches.
How to Handle a Breach of Contract
Should you breach a contract or should another party breach a contract and wrong you, it's best to consult a contract lawyer for guidance . They can review the contract and help you establish breach of contract necessities like what type of breach occurred, mediation, or legal representation in court if needed.
A clear, well-defined contract is the best way to avoid a breach of contract or to seek damages in the case of a breach. Connect with a contract attorney if you need assistance drafting a contract or seeking legal remedy for another party's wrongdoing.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
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Frank G.
Accomplished business and litigation counsel with experience managing a broad spectrum of legal matters on behalf of individuals as well as early-stage and established technology, software, service and medical device companies. Substantial experience in drafting commercial agreements as well as litigation and arbitration of complex business disputes as plaintiff’s and defendant’s counsel. Served as infantry officer (attaining rank of Major) in ground combat units for the United States Marine Corps and educated in Marine Corps management and tactics. Adept at taking complicated information and legal principles and presenting strategy to non-lawyers in a concise and easy-to-understand format.
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Lynn C.
I am a transactional attorney based in the Metro Atlanta, GA area, with a focus on real estate transactions, nonprofit, municipal law, corporate governance, and estate planning.
"Lynn is very knowledgeable and resourceful, she was able to explain me the process in details and provide all necessary information. Highly recommend. thank you"
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Paula C.
DACC Law is a general practice client-centered law firm. I am a Partner in DACC and have been proudly serving clients across Massachusetts since 1997. With over 25 years of legal experience I have a built a reputation for trust, results-driven advocacy across a wide range of practice areas including contract law, personal injury, estate planning, workplace issues, and real estate. At the heart of my practice is a client-centered approach -- one that values clear communication, responsive service, and practical legal solutions tailored to each individual's needs. Whether helping a family protect their future through thoughtful estate planning, representing someone injured due to negligence, or guiding clients through complex workplace or property matters, I bring deep legal knowledge and personal attention to every case. If you're looking for a seasoned Massachusetts attorney who combines experience with empathy, and strategic insight with strong advocacy, I am here to help.
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David A.
David M. Abner is a practicing attorney with over 30 years of experience representing clients ranging from startups to Fortune 500 companies in California and Texas. Mr. Abner is currently based in Los Angeles, California, and his practice focuses on negotiating the purchase and sale of businesses; negotiating equity and debt financing agreements; drafting and negotiating revisions to a variety of commercial agreements; and investigating and responding to law enforcement and regulatory compliance investigations. Additionally, Mr. Abner has considerable experience dealing with litigation involving ownership and valuation of privately held companies. He has tried nearly a dozen cases in private practice, including cases involving breach of contract, products liability, fraud, and officer and director liability. As in-house counsel for Ashland Inc., Mr. Abner worked with business leaders daily to assess, manage and prevent a variety of legal risks that threatened the viability and profitability of products, services and customer relationships. His efforts produced results that included settling a $700M anti-trust class action lawsuit for less than $7M; assisting in closing the sale of the company’s joint venture interests in an oil and gas subsidiary; assessing and quantifying the liabilities associated with the acquisition of other businesses; and supervising Ashland’s responses to DOJ, FBI and EPA investigations. Mr. Abner has been licensed to practice law in Texas since 1993, and in California since 2012. Mr. Abner obtained his Juris Doctorate from the Dedman School of Law at Southern Methodist University in 1993, and a Bachelor of Arts degree from the University of South Carolina in 1990.
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