The Business Litigation Blog

What is a “Breach” of a Contract?

Remember when a “contract” consisted of a gentleman’s agreement sealed with a handshake and you could trust the word of the other party? If not, do not feel bad because those days never existed. In fact, a whole body of law arose over the course of many generations as people entered into - and then tried to get out of – promises and agreements they made with others. This body of law is referred to as “contract law” or the “law of contracts.”

When a person breaks a promise they made as part of a contract, that person is said to have “breached” the contract terms. In fact, a breach is any nonperformance or noncompliance with the mutually understood and agreed to terms of a contract.

Ordinary and Material Breaches of Contract

For example, if the mortgage or car loan documents that you signed say that your payment is due on the 5th of every month, a payment made on the 6th is technically a “breach” of the contract you made with the loan company. In these and similar cases, a breach may not be so serious as to end the contract between the parties. If the parties can still complete their obligations under the contract, a breach will not result in the parties being relieved of their contractual duties.

However, some breaches are so serious that they deprive the non-breaching party of the benefit of what they bargained for in the contract. These are referred to as “material” breaches and typically result in the contract between the parties ending. For instance, if you agreed to buy the exact Aston Martin used in a blockbuster film for a set price, and the other party presented you with another, “run-of-the-mill” Aston Martin, the other person would have committed a material breach. In this case, you were deprived of the benefit of the contract-- a particular, one-of-a-kind vehicle.

What Happens When There is a Breach of a Contract?

When a contract has been breached, there are several legal remedies available to the non-breaching party (sometimes called the “aggrieved” or “injured” party). If money can adequately compensate the aggrieved party, he or she may be able to recover an amount from the breaching party that will put the aggrieved party either in the position he or she would have been in if the contract had been performed or the position he or she would have been in if the contract had not existed. For instance, if the aggrieved party had ordered a certain make and model of car with certain accessories and the accessories are missing, monetary damages can be awarded to the aggrieved party that would enable him or her to purchase the accessories that aren’t included.

In certain circumstances, a court can order a person to fulfill his or her contractual obligations by ordering “specific performance.” For instance, if the breaching party has in his or her possession the unique Aston Martin but refuses to sell it according to the terms of the contract, a court can order that the terms of the contract be enforced and the car sold.

If you feel that another person or business has not lived up to its obligations as part of a contract, contact the Patterson Law Firm right away at 312.223.1699. You may be entitled to certain legal damages or remedies. But in most cases you only have a limited time in which to seek these damages and remedies. Reach out to us today.

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