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Types of Breach of Contract

Posted on Jul 3, 2016 by in Courts, Law | 0 comments

When two parties enter a contract, they enter a binding agreement once they affix their signatures. By signing the document, the two parties become aware of the potential consequences when they violate the terms of the contract. When one of the parties breaks the agreement, there is a breach of contract. According to the website of Slater Pugh, Ltd. LLP, breach of contract carries huge penalties which could end up in a legal dispute.

A breach happens when one of the parties involved in the contract does not hold their end of the agreement. For example, when a seller sells a sub-standard item or does not deliver on time, he breaches the contract. If a car needs to be repaired while still under warranty and the shop does not repair the car, there is a breach of contract. There are several ways for a breach to happen:

Material Breach

This happens when one of the important elements of the agreement is not followed. A customer who gets a computer package but only received a monitor cannot sue the company because they still fulfilled their part of the contract.

Minor Breach

Let us say that the seller of the computer above delivered a whole package but some pages of the user manual were missing, there would be no breach involved. Instead the said company must remedy the situation.

Anticipatory Breach

From the word itself, there is anticipation that one of the parties involved will not be fulfilling their side of the contract. Just like minor breach, the erring party must need to remedy the breach.

Actual Breach

This is when one of the parties does not completely deliver on their side of the agreement.

Remedies For Breach

There are several remedies available in a breach of contract

  • Compensatory Damages – the party who breached shall pay a certain amount to reimburse the cost and compensate for the losses
  • Consequential and Incidental Damages – this is given to the parties involved who have knowledge of potential losses should the breach of contract is acknowledged
  • Liquidated Damages –these are damages stipulated in the contract
  • Punitive Damages is money awarded to the plaintiff for the action of the defendant
  • Attorney’s Fees can be paid to the legal representatives when expressly indicated in the contract or authorized by statute

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