Breach of Contract: Meaning, Kinds, Legal Issues and Examples

What is Breach of Contract?

A breach of contract happens when a party doesn’t meet its contractual obligations without a valid legal reason. Any deviation from the agreed-upon terms and conditions of a legally enforceable contract is considered a breach of that contract. It can take various forms, such as failing to perform a promised service, delivering goods that don’t meet agreed-upon specifications, or not paying an agreed-upon amount of money. If a contract is challenged in court, it will be enforceable. Giving the victim what they were originally promised would typically be the remedy if it could be demonstrated that a contract was broken.

Key Takeaways:

• When either of the parties in a legally binding contract refuses to fulfill their part of the promise as per the agreed terms, that party is said to have committed a breach of contract.
• Breach of contract can happen to both written and oral contracts.
• In case a contract has been breached and the agreed terms are not followed, the parties have the option to either settle the dispute in court or among themselves.
• Different kinds of contract breaches exist, such as real or anticipatory violations and minor or substantial breaches.

Kinds of Contract Breaches

The two general categories of breach of contract are:

1. Actual Breach: When one party doesn’t follow the terms of the agreement as agreed at the time of the contract. For example, A contractor fails to start kitchen renovation work by the agreed-upon date as per the contract.

2. Anticipatory Breach: When a party gives notice in advance that they will not be fulfilling their end of the bargain, this is known as an anticipatory breach. For example, A software developer notifies the client that they cannot complete the project as agreed before the specified delivery date.

3. Minor Breach: This is a small violation that occurs when something is delivered to you beyond the deadline. For example, The fruit seller breached the contract by delivering 30 coconuts four hours past the agreed-upon deadline.

4. Material Breach: This is a substantial violation that occurs when you get information that deviates from the terms of the agreement. For example, your company’s vendor breached the contract by delivering a wrong batch of scientific calculators instead of the agreed-upon 1000 12-digit calculators for the accounting conference.

Dealing with Contract Breaches: Legal Issues

In order to prove that there was a contract between the parties, the plaintiff; the person who files a lawsuit in court must first prove that there was a contract. In addition, the plaintiff must show how the defendant;the party that is the subject of a lawsuit or other legal action failed to adhere to the terms of the agreement.

The two important legal issues that arises under a breach of contract are:

1. Is there Validity to the Contract?

• Having a written document that both parties have signed is the easiest way to demonstrate the existence of a contract.
• Oral contracts can also be enforced however it gets very difficult to prove in the court, while some agreements still need to be in writing in order to be legally binding.
• These contracts include sales of items for more than ₹50,000, land sales or transfers, and agreements that are in force for more than a year following the parties’ signature.
• The courts will examine each party’s responsibilities in order to ascertain whether or not they have performed up to standard.
• The courts will also review the contract to determine whether any changes may have led to the alleged breach.
• Generally, the plaintiff is required to highlight the breach of contract to the defendant before proceeding to legal remedy.

2. Potential Causes of the Vulnerability

• The breach’s legal justification will be evaluated by the court.
• For instance, the plaintiff may have omitted or misrepresented key information, leading the defendant to argue that the contract was fraudulent.
• Alternatively, the defense can claim that the plaintiff used physical force or threats to coerce them into signing the contract, proving that the agreement was made under duress.
• In other instances, the breach may have resulted from mistakes made by both the plaintiff and the respondent.

Example of Breach of Contract

• James, a contractor, agreed to build a warehouse for Gamma Inc. within six months in a written contract.
• The contract outlined the work scope, price, and materials required.
• Two months into the project, a labor strike in the cement industry caused material prices to rise by 25%, and other raw materials increased by 15-20%.
• Both James and Gamma Inc. might find it challenging to continue the project due to increased costs.
• Depending on the contract terms and applicable laws, this situation could lead to a breach of contract as neither party can fulfill their obligations under the original terms.
• Resolving the breach might involve renegotiating the contract terms or seeking legal remedies based on the circumstances and contractual provisions.

Conclusion

In conclusion, breach of contract can arise from various circumstances, such as failure to perform obligations, deviation from agreed terms, or external factors beyond the parties’ control. It is essential for parties to uphold their contractual commitments to maintain trust and integrity in business relationships. When a breach occurs, seeking legal advice and exploring potential remedies, such as renegotiation or legal action, can help resolve disputes and mitigate damages. Ultimately, understanding contractual rights and responsibilities is crucial for effective contract management and dispute resolution.

Breach of Contract- FAQs

Is it illegal to breach a contract?

Unless it includes fraud, breaching a contract is often not regarded as a criminal offense. It is regarded as an issue between private individuals as opposed to one that has broad societal implications.

In the event of a contract breach, what are the repercussions?

That varies. In general, the party that was harmed should be returned to the same financial situation that they would have been in had there been no breach if it can be demonstrated that a contract existed and that it was broken.

What are the consequences of contract breach for society?

Even if it might not be advantageous to all of the contract’s participants, it is also possible that a breach of contract serves society’s overall interests. It may be more cost-effective to break a contract if doing so would result in fewer overall losses for all parties involved than it would in maintaining the terms of the agreement, even if doing so would negatively impact one or more of the parties.

Which is the most frequently granted for contract breach?

The most typical remedy for successfully suing someone for a violation of a contract is compensatory damages. The individual who broke the agreement will often have to give you enough money so you can find another source for the services they were supposed to supply.

References:

• Cornell Law School
• California Courts | Self Help Guide
• Stanford Law School

Note: The information provided is sourced from various websites and collected data; if discrepancies are identified, kindly reach out to us through comments for prompt correction.