Contracts impose a set of performance obligations on all parties to the agreement. Failure to comply with the requirements of a contract, without legal excuse, is called a “breach” of the contract. “Breach of contract” is also the name of the civil cause of action pursued in court against a breaching party.
Just as there are myriad types of contracts and contractual terms, the types of breach that can occur are numerous and varied. Probably the most common form of breach involves the failure of a party to make payments as required by the contract. Another common allegation of breach involves the failure to perform a task, or the alleged untimeliness of performance. Of course, poor performance can also lead to allegations of breach. Breach of contract can also occur when a party takes an action which makes it impossible for the parties to perform under the contract, or when a party repudiates the agreement.
However, several points bear mentioning. The breach must be material. In other words, the law of many states holds that minor discrepancies in performance will not constitute a breach if the party substantially complies with the spirit of the contract. Additionally, there are sometimes legal excuses for not complying with a contract, which can constitute a complete defense to a claim of breach. Finally, parties can waive their claims for breach of contract, both explicitly and by implication. Therefore, legal assistance is recommended to interpret potential claims for or against the company for breach of contract.