Breach of Contract Issues
Involves Agreement Review and What Was Done or Undone
Page last modified : December 05 2023
What is Considered as a Breach of Contract?
There are Four Forms of Breach of Contract, Being Minor Breach, Material Breach, Fundamental Breach, and Anticipatory Breach. To Varying Degrees and Various Available Legal Remedies, Breach of Contract May Result in Litigation.
Understanding the Various Wrongdoings That Constitute As Tortious Conduct and May Lead to Legal Proceedings
When a binding contract is broken, the basis for a lawsuit is breach of contract.
The understanding is no longer upheld. When one of the contract’s parties breaches a legally-binding pledge or indicates, either explicitly or subtly, that the
This lack of interest may arise in cases where the breach of contract is minor or does not cause harm. As such, it may be prudent to review each breach of contract to determine whether the actions result in a situation that warrants legal action. A lawsuit may be unsuccessful if it is filed without really important issues.
Minor Breaches
When a contract is mostly performed or there is a partial or insignificant breach, it can be considered a minor breach of the agreement. The non-breaching party does not have the right to sue for specific performance in such circumstances. There is only the ability to sue for real damages.
Consider a homeowner who hires a plumbing contractor to install water pipes and specifies that the pipes must be red even though they will be hidden within walls as an example of a minor breach. The contractor installs blue pipes that are just as functional as the red pipes, despite the red specification not being followed. The homeowner cannot file a lawsuit to get a court order telling the contractor to replace the blue pipes with red pipes, even though the contractor violated the contract’s literal terms. If any damages actually occurred, the homeowner’s only option is to seek compensation. There is no distinction in the value of the red and blue pipes in this pipe color example;
As a result, the homeowner incurred no damages, and any resulting litigation would be fruitless. An illustration of “no harm, no foul” is this.
Material Breach
If there is a performance breach that makes it possible for the non-breaching party to ask the court for specific performance or compensatory damages, that is considered a material breach. Using the previous example again, if the contractor had agreed to install copper pipes but instead installed iron pipes, which have a longer anticipated lifespan and are therefore more valuable, the homeowner could have filed a lawsuit for corrective costs like replacing the iron pipes with copper ones and tearing them out. There are, however, some exceptions to this rule whereby the homeowner is not able to recoup the cost of replacement and tear-out for the reasons listed below:
1. Economic Waste
The goal of the law is to prevent value from being destroyed. In the pipe example, walls would have to be destroyed in order to replace the pipes. Such waste is discouraged by law. In such a situation, compensatory damages are an available remedy for the difference between the home’s value with the iron pipes and its value if the copper pipes had been installed correctly in accordance with the contract. It’s also critical to remember that there are a number of factors to take into account with this exception to the particular performance remedy. In our pipes example, the tear-out solution is actually the less expensive option and needs to be pursued if the difference in the home’s value surpasses the cost of tear-out and correction.
Additionally, the tear-out solution might be justifiably required if there is a sizable risk of future harm.
2. Pricing In
Most cases of breach of contract are just the result of one or more parties not fulfilling their end of the bargain. In these cases, it will be reasonable for the party in breach to have expected or intended to save money by not performing. Although the party in the pipe example above should not have been entitled to the savings, the contractor never took corrective tear-out costs into account. Therefore, expecting the contractor to cover the costs of tear-out is unreasonable.
Using the pipes example again, most homeowners would be entitled to reimbursement for the decreased value of their home rather than tear-out and replacement damages.
The homeowner would get the $10,000 difference if the house is worth $250,000 with copper pipes but only $240,000 with iron pipes. As previously stated, tear-out and replacement is actually preferred by law if the cost is less than this difference—that is, less than $10,000 in this case.
Fundamental Breach
A fundamental breach of contract is one that is serious enough for the non-breaching party to end performance and file a lawsuit for damages. In the case of the pipes, the homeowner may have rightfully deemed the contract to be terminated and sought out a different plumbing contractor to rectify and finish the work if they had discovered the contractor installing iron pipes early in the project (and if the contractor had demonstrated a clear intent to continue with the iron pipes). Under such circumstances, this remedy is appropriate as long as the cost of the corrective tear-out is less than the reduction in the house’s value.
Anticipatory Breach
When a party clearly indicates that they will not properly perform in accordance with the contract when the performance is due, that party has committed an anticipatory breach of contract. The non-breaching party may treat a contract as immediately breached in the event of an anticipatory breach, instead of waiting to act until the contract is actually broken. Using the pipes example from earlier, for instance, if the contractor and homeowner agreed in their contract that work on installing copper pipes would start on May 1st and the contractor emailed the homeowner on April 15th to let them know that iron pipes would instead be installed on June 1st, Rather than waiting for May 1st to pass and the breach to actually occur, the homeowner can treat the contract as breached immediately. The homeowner has the right to look for a replacement contractor right away and to file a lawsuit against the original contractor right away to recover any damages.
Summary Comment
A contract can be broken in four different ways. The four categories are as follows:
A minor breach of the agreement, a material breach, a fundamental breach, and an anticipatory breach are the four types of breaches.
Depending on the specific facts surrounding each of these types of contract violations, each one could result in a successful legal case.
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