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Breach of Contract

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Breach of Contract Definition

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.

Breach of Contract Examples

Just as there are myriad types of contracts and contractual terms, the types of breaches that can occur are numerous and varied. Breach of contract examples include:
  • The failure of a party to make payments as required by the contract:  A tenant stops paying their rent.
  • The failure to perform a task, or the alleged untimeliness of performance:  A painter starts painting an office building but does not finish the job by the agreed upon completion date.
  • Poor performance, which can lead to allegations of contract violations:  A marketing company promises to get a furniture company on page one of Google but instead gets them on page five. 

When Breach of Contract Occurs

Breach of contract can occur when a party takes an action that makes it impossible for the parties to perform under the contract or when a party repudiates the agreement. 

Consequences of Breach of Contract

The consequences of a breach of contract will vary based on the parties involved and may include:
  • Restitution
  • Compensation damages
  • Punitive damages
  • Liquidated damages 

Breach of Contract Exceptions

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.

 

Related article:
Five Common Legal Mistakes in Business Contracts

 

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