What Counts as Breach of Contract?

Contracts are enforceable promises. When one side does not keep its promise, the law gives the other side remedies (Cornell LII).

The elements

To prove breach of contract, you generally must show:

1. A valid contract existed (offer, acceptance, consideration, and capacity)
2. You performed your obligations, or were excused
3. The other party failed to perform
4. You suffered damages as a result

Oral contracts are enforceable in many situations, but certain contracts must be in writing, such as real estate sales and contracts that cannot be performed within a year.

Types of breach

• Material breach: goes to the heart of the contract, such as never delivering goods; the other side can usually stop performing and sue.
• Minor breach: a smaller failure, such as a short delay; the other side can recover damages but must still perform.
• Anticipatory breach (repudiation): one party clearly says or shows it will not perform in the future; the other side can treat the contract as breached now (Cornell LII).

Remedies

• Compensatory damages: the money needed to put you where you would have been if the contract had been performed
• Consequential damages: foreseeable losses caused by the breach, like lost profits, if not excluded by the contract
• Liquidated damages set in the contract, if reasonable
• Specific performance: a court order to perform, usually for unique items like real estate
• Rescission: canceling the contract and returning what was exchanged
• Attorney fees only if the contract or a statute provides

Punitive damages are generally not available for ordinary breaches.

Common defenses

• No valid contract, or lack of a required writing
• The other side breached first
• Impossibility or frustration of purpose
• Mistake, fraud or duress
• Waiver or modification
• Statute of limitations

Deadlines

Deadlines vary by state and type of contract; written contracts often have longer periods than oral ones. Contracts for the sale of goods generally carry a four-year limit under the UCC, which parties may shorten to not less than one year (UCC 2-725).

Practical steps

1. Read the contract, especially notice, cure, dispute resolution and fee provisions.
2. Send written notice of the breach and demand.
3. Mitigate your damages; you cannot recover avoidable losses.
4. Consider mediation, small claims or a lawsuit.

A business lawyer can evaluate your claim. For small amounts, see small claims court.

Sources

1. Cornell Law School LII: Breach of contract
2. Cornell Law School LII: Anticipatory repudiation
3. Cornell Law School LII: UCC 2-725, Statute of limitations in contracts for sale