Breach of Contract

At JC Law, we understand that navigating the complexities of contracts can be daunting. When a party fails to uphold their end of an agreement, it can lead to significant financial losses, operational disruptions, and a great deal of frustration. That’s where I come in. At JC Law, I can assist you with a breach of contract dispute, ensuring your rights are protected and that you receive the compensation you deserve.

How Does a Breach of Contract Happen?

A breach of contract occurs when one party fails to fulfill its obligations as specified in the contract without a lawful excuse. This action of breach of contract is termed as the cause of action, based on which a party is legally empowered to file a case in the appropriate court for breach of contract. This failure can take various forms, such as failing to deliver goods or services as promised, not completing work within the agreed timeframe, delivering defective or substandard goods, or not paying for goods or services rendered.

For a breach of contract to occur, a contract must have existed in the first place. This begs the question, “What is a contract?” A contract is a formal, legally binding agreement between two or more parties. This agreement creates “mutual obligations that are enforceable by law.” In simpler terms, it’s a promise that the legal system recognizes and will uphold.

How to Avoid a Breach of Contract

Preventing a breach is always better than dealing with the aftermath. A breach of a contract may occur for several reasons. Here are five key ways to reduce the risk of a breach:

1. Reduce Ambiguity: Ambiguity in contract terms is one of the most common causes of breaches. If the language is unclear or open to multiple interpretations, disputes are almost inevitable. To avoid this, review the contract thoroughly before finalizing it. Ensure the terms and clauses are straightforward and not open to interpretation. Clearly define key terms, deliverables, timelines, and payment schedules. Use precise language and avoid jargon or overly complex wording. Seeking legal counsel during the drafting phase can help identify and eliminate potential ambiguities.
2. Contract Management and Documentation: Missed deadlines for payments, deliverables, or milestones often lead to breaches. Factors like failure to adhere to timelines, incomplete obligations, and poor tracking systems contribute to these issues. Using contract management tools and keeping thorough documentation can help avoid such risks. Implement a system for tracking deadlines, milestones, and deliverables. Maintain records of all communications, changes, and modifications to the contract. Contract management software can automate reminders, track progress, and store all relevant documents in one place, making it easier to stay on top of your obligations.
3. Reduce Reliance on Third Parties: A breach may occur if a third party fails to meet deadlines or quality standards. Relying too heavily on external parties without proper oversight can expose you to significant risk. To minimize this risk, reduce reliance on third parties and communicate deadlines to third parties wherever possible. Conduct thorough due diligence on any third party you plan to engage. Clearly define their responsibilities and expectations in a written agreement. Monitor their performance closely and address any issues promptly. Having contingency plans in place can also mitigate the impact of a third-party failure.
4. Check Jurisdictional Laws and Party Eligibility: Ensure the contract complies with the jurisdiction’s laws and that all parties are legally eligible to enter into an agreement. Failure to do so can render the contract unenforceable. Research the legal requirements of the jurisdiction where the contract will be enforced. Verify that all parties have the legal capacity to enter into a contract (e.g., they are of legal age and have the authority to represent their organization). Ensure that the contract does not violate any applicable laws or regulations.
5. Force Majeure Clause: Include a force majeure clause to account for unforeseen events like natural disasters, wars, or pandemics. These events can disrupt performance and lead to breaches if not addressed in the contract. Clearly define what constitutes such events and outline the next steps. This clause should specify which events will excuse performance and what actions the parties must take in the event of a force majeure. The case of Popich v. Fidelity & Deposit Co. illustrates the importance of a well-drafted force majeure clause. In this case, the contractor could not find labor after a hurricane to complete the contract. The Court of Appeal of Louisiana held that Hurricane Betsy did affect the contract to build a house. However, it did not amount to the level of excusing the failure to perform the contract as the difficulty was remote, showing the utmost of addressing what should be included.

Types of Contract Breaches

Even with the best precautions, breaches can still occur. It’s essential to understand the different types of contract breaches to determine the appropriate course of action. These breaches can be broken down into five major classifications, which are as follows:

1. Minor Breach: A minor breach of contract, also referred to as an immaterial or partial breach of contract, occurs when the non-breaching entity is merely entitled to the actual damages resulting from a breach, explains the Peck Law Group. This type of breach does not substantially affect the overall purpose of the contract. For example, a contract might state a vendor is required to serve soft drinks for a catered birthday party in green plastic cups. If the vendor shows up with yellow cups, the terms of the agreement would technically be violated, although it would not likely excuse the party host from having to pay the catering bill. At most, they would be due whatever costs were actually incurred from the minor breach, which in this case may very well be none. The non-breaching party is still required to fulfill their obligations under the contract, but they may be entitled to compensation for any damages caused by the minor breach.
2. Material Breach: A material breach is a more substantial violation of the promises of a contract. In a legal sense, material refers to “important information, generally significant enough to determine an issue.” This type of breach goes to the heart of the agreement and makes it impossible for the non-breaching party to receive the benefit of the bargain. In a material breach of contract case, a court might find one party’s failure to perform its obligation was so severe the aggravated party would be entitled to a more robust remedy. These might come in the form of economic damages, injunctive relief, or a court order for performance. The non-breaching party may also have the right to terminate the contract and seek damages for the breach.
3. Anticipatory Breach: This form of a breach occurs when it is inevitable one party will be unable to perform an obligation when such a performance is contractually due. This is also known as anticipatory repudiation. In these instances, the non-breaching party may attempt to sue for damages immediately, and that party does not need to wait until the breach actually occurs. The non-breaching party can immediately take steps to mitigate their damages and pursue legal action against the breaching party.
4. Actual Breach: In contrast to the anticipatory breach, this comes after a given performance is expected, rather than before the above-stated event. An actual breach occurs when a party fails to perform their obligations on the agreed-upon date or in the manner specified in the contract. This is the most straightforward type of breach, as the non-performance is evident and demonstrable.
5. Mutual Breach: This breach of contract occurs when both parties choose to break the terms of a contract agreement. This may occur after a substantial change in circumstances surrounding an agreement. A mutual breach effectively terminates the contract, and neither party can seek damages from the other.

In conclusion, at JC Law, I am here to provide expert legal assistance in navigating the complexities of contract law. Whether you need help drafting a contract, preventing a breach, or pursuing legal action for a breach that has already occurred, I have the knowledge and experience to protect your interests. Don’t let a breach of contract disrupt your business or personal life. Contact me today, and let’s work together to ensure your rights are upheld and justice is served.