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What Constitutes A Breach Of Contract

Breach of contract is when a legally binding agreement has been broken by one or more of the parties involved in the contract by either non-performance or interference with the other party's performance. If the wrongful party has not fulfilled their contractual agreement, or has given information to the other party that they will not perform their duties they have been contracted to do, which are mentioned in the contract or if action and conduct has shown they are unable to carry out these duties, they will be deemed to have breached the contract.

There are many different types of breaching a contract. A minor breach is where the innocent party cannot sue for a specific performance, but can only sue for actual damages they have incurred. A material breach is the failure to carry out the duties that permit the other party to the contract to either induce performance, or collect damages because of the breach. There are exceptions to this, such as a innocent party to the breach cannot recover for damages of economic waste, or pricing in.

Economic waste means the destroying of something valuable that cannot be recovered. Pricing in means that in most cases of a breach of contract, a party to the contract fails to perform one or more of the terms of business, thus meaning that they should have already considered the cost to perform those terms and therefore would thus keep that cost when they do not perform. Therefore the party is not entitled to keep that savings but in some cases, it is not reasonable to claim back those damages.

In Business law a fundamental breach is the hurt party is allowed to terminate the performance of the contract, which will mean the party is entitled to sue for damages. A anticipatory breach is a clear sign that the party will not perform when performance is owed, or a situation in which performance will not take place in the future. This type of breach gives the innocent party the option to treat the breach as immediate and therefore can terminate the contract and sue for damages, without the breach even actually having taken place.

The most common remedy in a breach of contract case is monetary damages. If the case fails to carry out the contractual duties and cannot be sufficiently remedied by monetary damages, the courts have the discretion to intervene and award an injunction or specific performance. The hurt party will have a duty to mitigate their damages by all reasonable means.

By: C Gyles