What “Breaching a Contract” Really Means
June 24, 2016
Whether you deal with employment contracts, tenancy contracts, or contracts related to sales, it is important for you to understand what a contract is, and what constitutes a breach of contract. Contracts are written or spoken agreements between two parties designed to protect both parties, and is enforceable by law. When a contract is breached, both parties are freed from their contractual responsibilities and the court determines what, if any, damages are to be paid by the breaching party. Contract breaches can be singular or continuing, and can be minor or material. Let’s look more closely at each of these scenarios.
Minor Breach of Contract
A minor breach of contract, or a partial breach, occurs when one party completes most, but not all of their contractual obligation. It is also considered a minor breach if they complete their obligation, but not in the terms of the contract. An example of a partial breach would be if a company is hired to build a deck using specific materials, and they complete the project but use the incorrect railing caps. In this case the employed company has technically completed their contract, but with a minor detail not in line with their contract. In situations like this, the other party has the right to sue for damages, equating to the cost of replacing the incorrect caps. In this case neither party is released from their contract all together.
Material Breach of Contract
A material breach of contract, unlike a minor breach, allows the affected party to terminate the contract and sue for damages should they choose to do so. Let’s take our deck example, in this scenario a material breach of contract could be hiring the contractor to build a deck using Trex and receiving a deck made of pressure treated lumber. The deck you receive is not the service you paid for, and therefore you’d have the right to sue for damages and terminate the contract.
Other Breaches in Contract
A continuing breach of contract is when one party continues to make minor breaches to an extended contract. An example of this would be a janitorial service that neglects one of their responsibilities several times during the course of their contract. One other type of contract breach is an anticipatory breach in contract, in which one party notifies the other that they will not be able to complete their side of the agreement, or in which it is inevitable that the contract will be broken.
When a material, anticipated, or continuing breach occurs both parties are released from the contract and the affected party has the right to sue for damages. If you have been the victim of a contract breach it would be wise to speak with a lawyer and get some legal counsel to see if your contract can be terminated, and if you are entitled to sue for damages. If you are ready to speak with a lawyer, contact us at DRA e-Law today!