When two parties enter into a contract, they both have a mutual obligation to comply with the terms and conditions set forth in the agreement. However, there are instances where one party fails to fulfill their duties, resulting in a breach of contract. Breach of contract can take several forms, and understanding these forms can help both parties avoid situations that result in costly legal battles. Here are four different forms of breach of contract you should be aware of:
1. Anticipatory breach
Anticipatory breach happens when one party declares an intention not to perform their obligation under the contract before their performance is due. This form of breach of contract occurs when a party informs the other party that they cannot fulfill their obligations due to some reasons. Under such circumstances, the other party can terminate the contract and seek damages if they incurred any losses as a result of the breach.
2. Material breach
A material breach of contract occurs when one party fails to perform a significant obligation under the contract. In other words, it is a breach that goes to the heart of the agreement. A material breach gives the other party the right to terminate the contract and seek damages. A material breach can also occur if a party delays their performance significantly, making it impossible for the other party to fulfill their obligations under the agreement.
3. Minor breach
A minor breach of contract is less serious than a material breach. It occurs when a party fails to perform a minor obligation under the agreement. Minor breaches do not give the other party the right to terminate the contract but instead allows them to seek damages. An example of a minor breach is a delay in completing a non-critical project stage.
4. Implied breach
Implied breach of contract occurs when one party does not expressly violate the terms of the agreement, but their actions or inactions make it impossible for the other party to fulfill their obligations under the contract. This type of breach may arise due to circumstances outside of a party`s control, such as a natural disaster or a change of law.
In conclusion, these four forms of breach of contract highlight the importance of understanding the terms and conditions contained in a contract before signing it. Parties that fail to perform their obligations adequately risk costly legal battles. If you are not sure about your obligations or require assistance in drafting a legal contract, consult with an experienced attorney to avoid potential legal problems.