Unfortunately breach of contract is something that individuals and businesses must deal with in the United States and everywhere else in the world. The purpose of this article is to examine what happens if there is a breach of contract. The article first defines what a breach of contract is, and then analyzes how a breach of contract can impact an individual or a business and what remedies are available.
The contract is a legally binding promise made between two or more parties. Each party to a contract is required to perform a certain duty or pay a certain amount of money for a specific good or service. The purpose of a legally binding contract is to allow each contractual party to have a legal recourse in the event of a breach of contract. The breach of contract occurs when parties do not keep their legal promises. This can occur when a party fails to fulfill the agreed obligation, according to the terms of the contract, such as not delivering in the appropriate time frame, not meeting the terms of the agreement or failing to perform the obligation altogether.
In such instances, the non-breaching party is entitled to remedies for breach of contract. There are four main types of breach of contract: minor breach, material breach, fundamental breach and anticipatory breach. A minor breach of contract occurs when a party fails to perform a part of the contract. The non-performance has to be non-essential; a minor breach is sometimes referred to as an impartial breach. A material breach is a breach that is more substantial, and it impairs the contract as a whole. This kind of breach is sometimes called a total breach. A fundamental breach is considered to be more egregious than a material breach and it allows the non-breaching party to terminate the contract. Lastly, the anticipatory breach occurs when one party knows that the other party will not be able to perform the required obligation from the contract.
Depending on the kind of breach that one has experienced, there are multiple remedies available. In many cases, one can just seek monetary compensation for the breach of contract. Common monetary remedies and damages in breach of contract cases can include compensatory damages, consequential and incidental damages, liquidated damages, and punitive damages. Sometimes, parties seek a different remedy than monetary damages. Some of these remedies can be specific performance, rescission or reformation.
Often, the remedies that parties are entitled to are included in the agreement itself. Therefore, before considering a legal action for the breach of contract, one must review the initial contract and look for any limitations or requirements.
Breach of contract disputes are among the most common legal issues in today’s courts. Breach of contract issues can impact both individuals and businesses. Knowing your rights and legal options can make dealing with breaches of contract a little easier.
Malescu Law P.A. – Business Lawyers