Breach, Remedies, and Defenses

Breach of Contract

Breach of contract happens when one party to a valid contract fails to fulfill the promises that he, she, or it made in the contract. There are four types of breach: actual, anticipatory, material, and minor.

An actual breach of contract happens when one of the parties to a contract refuses to fulfill some or all of their obligations by the due date. An anticipatory breach, on the other hand, occurs when one party to a contract, before the due date for performance, makes it known that they will not perform their obligations. For example, Mr. Smith agrees to cut Mr. Bob's lawn for three months for $25 per month (February, March, and April). On January 23 Mr. Smith tells Mr. Bob that he is not going to cut his lawn. This is a simple example of an anticipatory breach.

In addition, breaches can be material or minor. A material breach relates to a main term or purpose of the contract. For example, if Bob hires Sue to build him a grocery store, and instead Sue builds Bob a clothing store that does not meet his needs, the breach will be deemed material. In this case, Bob will not have to perform anymore under the agreement and will have a right to certain remedies.

A minor breach is different and less severe but can still be important. For example, suppose that Shane hires Phil to build a home. Phil builds the home according to the terms of the agreement, but the home is finished one day late. This could be deemed a minor breach. However, if the contract included a provision that time was critical, for example, the breach could significantly affect Shane's expenses or other commitments if completing the home is delayed. If not, a court would likely consider it minor in nature.