WHAT IS A BREACH OF CONTRACT?
A breach of contract is a legal civil matter in which one or more parties fail to meet the commitments of a binding agreement or by interfering—keeping the other party from fulfilling their obligations. Failing to perform any of the terms of a contract without a valid legal reason will result in a breach of contract. The types of contracts include written contracts and verbal contracts. Written contracts easily provide proof for breach of contract in court, and help ensure that both parties uphold the terms of an agreement. Conversely, presenting proof of a breach of contract for a verbal agreement is much more difficult and requires supporting paperwork such as e-mails, quotes, invoices, and notes.
WHAT TYPES OF BREACH OF CONTRACT ARE THERE?
The types of breach of contract include:
| MATERIAL BREACH
A Material Breach of Contract means that a party delivered something significantly different than what they agreed to and specified in the contract. As an example, completing a deadline a day later than stipulated would be a minor breach, whereas providing a product or service outside of specifications may be a material breach. |
ANTICIPATORY BREACH
An Anticipatory Breach of Contract occurs when a breach of contract is expected due to a party refusing or being unable to fulfill their end of the deal or failing to timely satisfy conditions, giving the other party enough proof or reason to believe that the agreement will result incomplete by the due date. |
MINOR BREACH
A Minor or Partial Breach of Contract suggests that a party has met the primary commitments of a contract but failed to satisfy a condition, minor term, or part of their responsibilities. This minor breach of contract may still be significant if it results in damages. |
ACTUAL BREACH
An Actual Breach of Contract means that one party refused to do what the terms said they would do by the deadline, or failed to fully deliver as promised. |
FUNDAMENTAL BREACH
A Fundamental Breach of Contract is when one party breaks the terms of the contract, potentially allowing the other party to sue for damages and end the contract. |
WHAT HAPPENS IF THERE IS A BREACH OF CONTRACT?
The first thing you may want to do is check the contract to see if there’s any terms or conditions in place for the event of a contract breach. Next, let the other party know that a breach of contract has occurred. Providing the court with proof that you notified the other party and tried to correct the breach of contract can only help your case. Compile every related record, document or paperwork and talk to a reliable business lawyer. If you need business legal advice, please give us a call; Spiegel & Utrera, P.A. is a fully licensed business law firm that delivers professional legal services at extremely affordable prices.
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WHAT ARE THE REMEDIES OF A BREACH OF CONTRACT?
In the case of a breach of contract, there are several methods to remedy the situation. The primary objective of remedies in contract law is to make sure that the non-breaching party ends up in the position they would have been in if the breaching party had performed as the contract promised. Some of the remedies for breach of contract include:
| COMPENSATORY DAMAGES:
the party at fault for the breach of contract pays compensation for any damages incurred by the breach, along with payment to the non-breaching party for hiring someone else to complete what they failed to deliver—among any other losses. |
PUNITIVE DAMAGES:
may be given out to punish the wrongful party and to deter others from doing the same. Punitive damages typically apply to a party that acted maliciously, fraudulently, willfully. |
BREACH OF CONTRACT AND MANDATORY ARBITRATION
When drafting a contract, both parties should pay very close attention to what will happen in the event of a breach. As a signatory, you should be able to predict what exactly will happen legally if a party were to breach the contract. For example, including a mandatory arbitration clause in the event of a lawsuit can be an effective method for resolving future disputes. In arbitration, the dispute is submitted to a third-party (arbitrator) that settles the dispute after hearing a presentation by both parties. Arbitration, most of the time, is much less expensive than the court process. There are lower costs in arbitration than there are in for preparing for trial. The rules of evidence are usually more relaxed than in a trial—therefore, documents can be submitted without using formal court procedures.
WHAT CAN YOU SUE FOR IN A BREACH OF CONTRACT?
You can sue for compensatory damages to recover from any losses incurred by the breach of contract. You can also claim consequential damages for the loss of profits you would have earned if the breaching party performed as promised. Liquidated damages typically occur if there is a condition in the agreement that outlines the penalty or compensation for a breach of contract. The non-breaching party may also be awarded Equitable Relief in place of monetary damages, which forces the breaching party to discontinue or take a specified action in relief of the injured party.
HOW MUCH CAN YOU SUE FOR IN A BREACH OF CONTRACT?
You can sue for a breach of contract in a small claims court for dollar amounts ranging from $1,500 to $15,000. If the compensation you are pursuing exceed the power of a small claims court, consider suing in a civil trial court. Though able to represent yourself in both courts, you should hire a lawyer to attain maximum compensation and cover all your bases.
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