Breach of Contract

Civil Action and Remedies

A breach of contract may include:

• not finishing a job
• failure to make payment in full or on time
• failure to deliver all the goods
• substituting inferior or significantly different goods
• not insuring goods

An anticipatory breach can occur by an act which indicates the party will not complete the work.

A breach of contract in legal terms amounts to a broken promise to do or not do an act. Breaches of a contract are single, occurring at a single point in time, or continuing breaches. A lawsuit for breach of contract is a civil action and the remedies awarded are designed to place the injured party in the position they would be in if not for the breach. Remedies for contractual breaches are not designed to punish the breaching party.

How to determine whether you have an action for breach of contract

What Is a Breach of Contract?

A contract is a legally enforceable promise, either made in writing or orally. However, certain promises must be reduced to writing in order to satisfy the Statute of Frauds, a rule of substantive law, not a rule of evidence. To win a breach of contract action, the plaintiff will have to prove three elements:

1. The existence of a Valid Contract

A valid contract must exist before a breach can occur. The contract does not need to be in writing. An oral contract can be enforceable if a party can prove the existence. To prove its existence of an enforceable contract, a party must establish a) an offer, b) acceptance and 3) consideration.

2. A Breach of the Contract’s Terms

Generally, a breach occurs when a contractual promise is broken. However, only a breach of contract that detracts value from the non-breaching party can warrant a lawsuit. Such instances are considered material or fundamental breaches. A fundamental breach is a breach that breaks a fundamental aspect of the agreement, an aspect so important that the wronged party can terminate the fulfillment or key provision of the contract. An anticipatory breach is where one party has every reason to suspect that the other party will breach, even if they have not yet, so they repudiate their part of the agreement first.

Courts will award damages in the event of a breach, but the intent is not to punish the breaching party. Recall, it is simply to put the other party in the position they would occupy if the contract had been fulfilled.

3. Damages for Breach of Contract

To recover for breach of contract, a party must prove that the other party harmed them in some way. This is referred to as damages. Damages cover money lost, but may also include time lost as well. If possible, the offending party can also be ordered to fulfill the contract. Alternatively, the wronged party may ask the court to void the contract and restore it to the position it was in before entering the contract.

Hot Tip

In cases where money is inadequate to compensate the aggrieved party, the court may award specific performance to force the breaching party to fulfill the terms of the contract. If the contract itself provides for any additional payments to the aggrieved party should the contract be broken, the court may also order this additional award.