A contract is a legal agreement between two or more parties. If a party fails to fulfill their obligations under the contract, they can be held responsible for breaching the contract. A breach can include anything from failure to deliver the goods or services on time, late payment, or not providing products that meet the standards of the contract. If you regularly deal with contractual agreements, it’s important to understand what a breach is — and what your remedies are.
Types of Contract Breaches
Breaches of contract can happen for many reasons. To prove a breach of contract occurred, the person suing under the contract must first established that a legally binding agreement existed between the parties. The party alleging the breach must show the other party violated the specific terms to which they were bound within the contract.
The four main types of contract breaches include:
- Minor breach — A minor breach is also sometimes called a partial breach. This occurs when a party does not violate the whole contract, but a portion. An example of a minor breach is receiving goods or services a day later than the due date specified in the contract, but the delay does not cause harm.
- Material breach — A material breach occurs when one party fails to substantially perform their duties as detailed in the contract. With this breach, the purpose of the contractual agreement is broken. An example of a material breach is receiving a different product from a vendor than that which was ordered.
- Actual breach — An actual breach of contract occurs when one party refuses to perform the terms of the contract.
- Anticipatory breach — An anticipatory breach of contract arises when a party states in advance they will not be fulfilling the terms of the contract.
The most severe contract breach concerns a repudiatory breach. This happens when a breach goes to the root of the contract and frustrates the purpose of the contract — and its performance. A repudiatory breach of contract will result in the entire contract breaking down. After a repudiatory breach, the non-breaching party can decide whether they wish to terminate the contract.
Remedies for a Breach of Contract
Several remedies exist for a breach of contract, depending on the facts of the case. These remedies fall into two categories: equitable remedies and legal remedies. Equitable remedies are those that are imposed where monetary damages would not adequately cure the non-breaching party. Such remedies can include specific performance of the contract, rescission of the contract, and reformation of the contract.
Legal remedies take the form of monetary damages to help make the non-breaching party whole. For example, compensatory damages are a legal remedy that compensates the non-breaching party for the breach. These can include expectation damages — which the non-breaching party would have received had the contract been performed — and consequential damages meant to reimburse the non-breaching party for the indirect costs incurred due to the breach.
Other damages that a non-breaching party might be awarded can include liquidation damages, punitive damages, attorney fees, and court costs.
Contact an Experienced New York Business Attorney
If you are facing a breach of contract matter, it’s critical to have a skillful business law attorney by your side who can advise you of your legal rights and remedies. Brinen & Associates provides trusted representation to business owners and entrepreneurs for a wide array of issues involving contracts, including those involving breaches. Call (212) 330-8151 or send us a message to learn more about how we can help.