Understanding the Different Types of Breach of Contract

Did you honor a contract, but the other party failed to uphold its end of the deal? A breach of contract carries significant consequences for the wronged party if they don’t pursue justice. But you can take legal action to protect yourself from the fallout.

Anthony Law Group’s contract lawyer in Phoenix, Arizona, outlines the different types of contract breaches and how you can seek damages from any other parties involved who didn’t adhere to the contract terms. Read to learn more about common examples of contract breaches and how to protect yourself.

What Is a Contract Breach?

A contract is a legally binding agreement. It outlines obligations for two or more parties who agree to uphold their end of a deal. One party typically provides a product or service by a specific due date.

They uphold specific performance standards to ensure service or product quality. The other party pays a predetermined dollar amount for those provisions. Parties must meet the obligations stated in the contract. Otherwise, they need a valid legal excuse to break the contract.

Generally speaking, a breach of contract occurs when one party fails to satisfy their contractual obligations and harms the non-breaching party in some way because of their failure.

What Are the Four Types of Breach of Contract?

If you are the non-breaching party, you’ll find that the contract falls into one of four categories. Contract breaches range from minor breaches that don’t significantly impact you to actual breaches that disregard all contract obligations. Let’s explore where your case might fall if a breach of contract occurs.

Minor Breach

A minor breach, also called a partial breach, is the least severe type of broken contract. You might purchase a product from a manufacturer who agrees to have the product to you by a predetermined due date. The manufacturer inadvertently commits a breach of contract when they cannot or do not ship the product on time.

You receive the shipment a bit later than stated in the agreement, which causes a partial or immaterial breach that does not cause significant financial loss.

Material Breach

A material breach occurs if you purchase one product but receive something different. You might order screws and nails from a manufacturer only to receive a set of wrenches. Material breaches might happen because the manufacturer mixed up their shipment or order details.

The manufacturer can typically correct this breach of contract by sending the correct products, fixing internal errors, and offering additional services or discounts to make up for the inconvenience.

Actual Breach

An actual breach occurs when the other party fails to meet the contract’s terms by willfully refusing to do so. Let’s say you hire a freelance graphic designer to create a logo and images for several social media posts. They commit an actual breach of contract when they refuse to create the graphics.

Anticipatory Breach

The last answer to “What are the four types of breach of contract?” is an anticipatory breach. An anticipatory breach occurs when someone draws up a contract they know they cannot or will not honor. The freelance graphic designer above might commit multiple anticipatory breaches by accepting work commitments with tight turnarounds in an effort to earn money from advances, all the while knowing they will never actually deliver on those promises.

What Consequential Damages Do Contract Breaches Carry?

As the non-breaching party, you can pursue the following damages to correct the problems created by the breached contracts:

• Indirect damages: You might suffer from a breach of contract in unforeseen ways. You may be able to recover indirect losses in some instances, but not always.
• Reliance damages: Reliance or monetary damages are payback for the financial losses caused by contract breaches.
• Compensatory damages: You receive compensatory damages after a breach of contract that leaves you with less money than you had before. For example, you want your money back after paying for a product you never received.
• Liquidated damages: Parties may estimate the dollar amount of damages that a breach of contract will cause to the non-breaching party. While the damage is monetary, it covers other non-financial breach aspects.
• Contract termination: Non-breaching parties may terminate their contracts following breaches that did not cause much destruction. They may also recover additional damages on top of terminating the contract.
• Contract lawsuit: You can seek legal representation and pursue a case if a person or company fails or refuses to pay enough money to cover the contract breach damages.
• Punitive damages: According to contract law, a court decides whether the breaching party owes the innocent party any additional compensation such as punitive damages intended to punish the breaching party for willfully breaching the contract.

What Legal Remedies Can Solve a Breach of Contract?

You can remedy a breach of contract through various means, including:

• Non-legal mediation, where you and the other party decide how to resolve the breach of contract without involving lawyers or courts.
• Legal mediation and settlements, where you settle the breach of contract case and determine appropriate damages with help from a lawyer outside of court.
• Building a case for a lawsuit. You might choose this route when you cannot reach an agreement to resolve the breach of contract and must pursue the breaching party in a court of law to recover damages.

Avoiding Breach of Contract Is Key

You can help to avoid a breach of contract by drafting a contract that includes the following elements:

• Concise contractual obligations: Draft contracts that lay out their obligations in clear and concise terms. You and the other party should know what counts as a breach of the contract without any doubts.
• A contract lawyer: Having a lawyer draft the contract to make sure that the key terms and obligations of the contract are properly defined.
• Asking questions: It is important to ask questions when you do not understand what a word means or what an obligation implies.

Consult a Contract Lawyer at Anthony Law Group When Writing Contracts or Facing Breaches

What are the four types of breach of contract? You should know about minor, material, actual, and anticipatory breaches. Call Anthony Law Group at 602-362-2396 if you need to seek damages or sue for breach of contract in Phoenix, Arizona.