A breach of contract occurs when one party to a legally binding agreement fails to uphold their obligations as stipulated in that contract. This can happen in various ways, including failing to perform on time, not performing to the standards agreed upon, or completely refusing to perform.
There are generally two types of breaches:
-
Material breach: This is a significant failure that undermines the core purpose of the contract. For example, if a contractor is hired to build a house and only completes half the work, this would constitute a material breach because it fundamentally alters the agreement’s intent.
-
Minor breach: Also known as a partial breach, this occurs when the terms of the contract are met, but not in full or as specified. For instance, if a supplier delivers goods a day late but the goods are of the correct quality and quantity, this may be considered a minor breach.
When a breach of contract occurs, the non-breaching party has the right to seek remedies, which can include damages (monetary compensation), specific performance (forcing the breaching party to fulfill their obligations), or rescission (canceling the contract).
In summary, a breach of contract disrupts the expected transaction between parties and provides the aggrieved party with legal recourse to address the disruption.