What is a Breach of Contract?
Breach of Contract Elements
To prove a breach of contract claim one must establish:
- the existence of a binding enforceable contract,
- performance by the party seeking recovery,
- non-performance by the other party, and
- damages that were a foreseeable consequence of the breach.
Breach of Contract Types
A breach of contract can come in many different forms. For example, failing to fulfill obligations set forth in the contract or doing something that the contract prohibits may be considered a breach of contract. Each type of breach of contract is treated differently under the law.
A Material Breach of Contract
When a party fails to perform under the contract in such a significant way that the non-breaching party may sue for breach of contract. When there has been a material breach, the non-breaching party may be relieved from having to perform its obligations under the contract.
Anticipatory Breach (a.k.a. Anticipatory Repudiation)
An anticipatory breach of contract or an anticipatory repudiation is when one party in a contract indicates through words or conduct that it is unwilling to perform his or her contractual obligations. In that situation, the non-breaching party may seek damages, demand assurances that the breaching party will perform, or stop his or her own performance.
Minor / Impartial Breach of Contract
A minor breach of contract is when a party fails to perform a term of the contract, but the breach is so insignificant that the remainder of the contract can still be completed in its entirety. A minor breach should not undermine the overall purpose of the contract.
Breach of Contract Defenses
Often the party defending a breach of contract claim has a multitude of defenses available to them. Commonly, a party will claim that a contract never existed or that it did not in fact breach the contract. Some other commonly asserted defenses include:
- The contract was not in writing (“Statute of Frauds”)
- The contract was too indefinite
- There was no mutual assent / there was no meeting of the minds
- Lack of capacity to enter into a contract
- Fraudulent Inducement
- Undue Influence
All of these concepts can be very complex and should be carefully evaluated with a New York and New Jersey breach of contract lawyer.
Breach of Contract Damages
Typically the non-breaching party may recover general damages which are the natural and probable consequence of the breach. Put another way, a party is not entitled to damages that are so remote or unforeseeable that they cannot reasonably be anticipated.
Monetary damages for breach of contract come in the form of direct damages (a.k.a. actual or compensatory damages), incidental damages, nominal damages, and consequential damages (e.g., lost profits or lost opportunity).
In some instances, monetary damages might not be sufficient to protect the non-breaching party’s interests and may pursue equitable remedies which will impact the conduct of the non-performing parties. Equitable remedies available for a breach of contract may include:
- Specific performance
- An injunction
In some instances, the contract might permit a prevailing party to a breach of contract action to recover its attorneys' fees and litigation related costs.