Breaches of contract can occur as a result of nonperformance and / or by announcing an intention not to perform, but there are many types of breaches. The following are common complaints in breach of contract cases:
- Failure to deliver the expected service;
- Failure to deliver the expected goods;
- Failure to complete the job;
- Failure to make a payment;
- Performance was below the agreed standards;
Types of Breach of Contract
Actual Breach vs Anticipatory Breach
An actual breach occurs when any party has not done what they agreed to do when they agreed to do it. An anticipatory breach occurs when a party indicates a decision not to perform their responsibilities at a future date.
A material breach is a failure of performance that affects the purpose of the contract and makes it impossible for the non-breaching party to receive what was agreed to. For instance, if there is an agreement to buy a truck and the seller delivers a car, the buyer is excused from paying for the wrong vehicle.
A non-material breach does not alter the purpose of the contract and generally does not excuse the parties from performing. For example, if the agreement is to buy a red truck with a tan interior and the seller delivers a red truck with a silver interior, the buyer is still required to pay for the truck but may be entitled to damages for the breach.
“Minor” Breach of Contract
The materiality standard recognizes the principle that some breaches are so minor that they may not make any difference in whether you get what you expected under the terms of the contract. In legal terms, there is such a thing as a de minimis breach or offense. There are some “wrongs” that may simply not matter in the scheme of things, even when someone has technically not fulfilled their contractual obligations.
The fact that a minor breach may not be material does not give the non-breaching party license to freely disregard the terms of the contract. That said, it may be that a series of non-material or minor breaches can add up to a material breach that could entitle a party to monetary damages.
A series of non-material or minor breaches can add up to a material breach.
A court would look at several factors to determine whether you can receive compensation for an immaterial breach. In general, if you have suffered damages from the breach, you can sue for damages regardless of the materiality or severity. In one common example, a supplier could deliver materials on April 2 when the contract required them on March 31. Two days late could have different consequences in different situations. In many cases, the court would take a “no harm, no foul” approach, especially if you did not suffer any damages as a result.
However, two days late could also be material in a way that would entitle you to financial compensation. For example, if you were relying on the delivery for an event that was scheduled on April 1, a delivery on April 2 would be a significant problem. You may be forced to scramble and pay higher prices for an alternative source of supply. In that case, the breach is almost certainly material and the breaching party would need to pay your damages.
Determining if the Type of Breach Requires Legal Assistance
Contracts are how business gets done. Each party to a contract wants something the other has to offer. They agree to do certain things so that each can get what they want. If the other party has breached a contract you entered into with them, you are in a difficult position. There are times where you must take action on your own but you need to make a quick judgment about whether the breach was material. Your choice will have significant consequences. It is hard to know how a court would rule on the matter if there was a breach of contract lawsuit.
If you mistakenly claim that a breach was material and use that as grounds to not perform your end of the contract, you could be the one in legal jeopardy if the court does not agree with you about the breach’s materiality. In other words, you could be ordered to pay for what you received under the contract even if it was not exactly what you were supposed to receive according to the contract’s terms. Worse still, you could be on the hook for a breach of contract if you did not do what was required of you under the contract because you thought the breach would get you off the hook for your obligations.
When a breach of contract occurs, contact the Houston Breach of Contract Attorneys at Berg Plummer to discuss your legal options. The attorneys at Berg Plummer are experienced commercial litigation lawyers and can advise you on the best course of action.