Breach of Contract
There are two main types of breach. Let’s talk about the small stuff first.
A minor breach. This is a slight deviation from the contract. The remedies (if any) are limited where the breach is insignificant or the breaching party has substantially performed. The non-breaching party can only sue for actual damages, or money damages, and not specific performance, such as the forced performance of a contract for the sale of land, for example. See the holding of Jacob & Youngs v. Kent.
A material breach. This is a significant failure to perform that permits the other party to the contract to either compel performance, or collect damages because of the breach. In fact, an attempt to label a minor breach as something serious could, in itself, constitute the material breach. This is why it is important to contact a lawyer if you are contemplating a breach of the agreement, or if you plan to accuse the opposing part of “breach.”
The Restatement (Second) of Contracts identifies the following criteria can be used to determine whether a specific failure constitutes a breach:
“In determining whether a failure to render or to offer performance is material, the following circumstances are significant: (a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; (b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived; (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.”
American Law Institute, Restatement (Second) of Contracts § 241 (1981)
See Guy v. Liederbach, 459 A. 2d 744 – Pa: Supreme Court 1983, citing the Restatement Second.
There is yet another type of breach. A breach by anticipatory repudiation is an unequivocal indication that the party will not perform when performance is due, or where non-performance is inevitable. An anticipatory breach gives the non-breaching party the option to treat such a breach as immediate, and, if repudiatory, to terminate the contract and make a claim for damages (without waiting for the breach to actually take place).
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Key Topics: Essential Terms | Oral Versus Written Agreements | Statute of Limitations