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Four types of breach of contract

On Behalf of | May 14, 2021 | Firm News

A contract is a legal document that creates obligations between the parties who enter the agreement. A breach of contract occurs when one party fails to fulfill any part of its contractual obligation.

There are four main types of breach of contract.

1. Minor breach

A minor breach of contract occurs when one party fails to fulfill one part of a contract, but the breach is so minor that it does not affect the fulfillment of the rest of the contract. This is also called an immaterial or partial breach. It is difficult to show harm in a minor breach unless the wronged party can prove how the missed part of the contract caused a significant loss.

2. Material breach

A material breach of contract is when a key element of the contract is not fulfilled as agreed. It is a failure to perform the contract to such a degree that the heart or purpose of the agreement is fundamentally broken. This is the most severe type of breach of contract.

3. Anticipatory breach

When one party to a contract acknowledges to the other that they will not be able to fulfill their contractual obligation by the agreed-upon time it is an anticipatory breach. The non-breaching party may also realize that a breach will occur through the actions of the breaching party without being formally notified.

4. Actual breach

An actual breach of contract occurs when one party improperly or incompletely fulfills the duties obligated in the contract. It is a breach that has already occurred, it is not anticipated.

When a breach of contract occurs, the wronged party can either seek to have the contract enforced or seek damages or restitution to recover from the financial harm of the breach. The remedy or recovery available depends on the type of breach and the severity of harm it caused.