A breach of contract occurs when one of the parties to the contract fails to perform their obligations arising out of the contract. Both written and oral contracts can be breached. One of the disadvantages with oral contracts is that the terms and conditions of the contract can be vague and undefined. When the deal is in writing, it is easier to determine if a party has breached the contract or not. When a contract has been breached, some type of damages might be necessary and not all breach of contracts lead to a lawsuit. Generally speaking, there are multiple types of breach of contract and this article analyzes the types of breach of contract in the United States.
How many types of breach of contracts are recognized in the US?
There are three types of breach of contracts recognized by law today in the United States. Those types of breach of contract are minor breach, material breach (major or fundamental breach) and anticipatory breach.
Minor breach of contract
A minor breach, often called a partial breach of contract occurs when one party has “substantially performed” or met the essential obligations of the contract, but did not meet a condition that is minor and that does not affect the terms of the contract in a significant manner. The non-breaching party is entitled to collect the damages. For example, if a homeowner hires a contractor to do a job on his house and the contractor does not perform the job properly (for instance does not install the right type of windows), the homeowner can ask the contractor for the damages incurred.
Material breach of contract
On the other hand, a material breach, often called a substantial breach or major breach, usually occurs when a party has not “substantially performed” or has not met the essential obligations of the contract. This type of breach gives the non-breaching party the right to stop performing their obligations and also gives them the right to file a lawsuit for damages. For example, Samantha, the buyer, enters a home purchasing contract and John, the seller, refuses to give her the keys to the home after she has paid the price. John is substantially breaching the contract and Samantha is entitled to damages.
Therefore, the main difference between a minor breach and a material breach of contract is the level of severity in breach of contract. A material breach is much more serious and makes the completion of the contract more difficult or rather impossible. The minor breach is not significant enough to make the rest of the contract impossible or difficult to execute. A fundamental breach of contract is generally known to occur when a contract is canceled entirely, due to the breaching party’s actions (or inactions).
Anticipatory breach of contract
An anticipatory breach of contract occurs when a party breaches the agreement before the deadline for performing the contractual obligations. It occurs when one party in the contract expresses his or her inability or unwillingness to perform the obligations specified in the contract before the due date.
Due to the serious nature and legal implications of situations involving breach of contract, it is advisable to seek guidance from an attorney who specializes in business law. Contact us or schedule a consultation with your business attorney in Miami, Florida USA to assist you with your contractual needs and help you better understand the types of breach of contract.
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