What is a breach of contract?

Whether you own a small business or are in the corporate office of a large company, you may deal with contracts on a regular basis. Contracts are a necessary part of business interactions, as they allow you to define a service or partnership and add specific guidelines regarding the matter. A breach of contract occurs when one of the parties involved in the agreement fails to keep their end of the bargain or does not fulfill their obligation as stated in the contract.

To understand whether a breach of contract has occurred, the judge presiding over the case will look at several factors regarding the contract and the matter at hand. These factors include the following:

  •          Was the contract legally binding?
  •          Who was involved in the contract?
  •          What were the responsibilities of each party as defined in the contract?
  •          Were there any modifications of the contract?
  •          What issue caused a party to claim a breach has occurred?

The judge may then decide whether the accused breach of contract was in violation of the actual contract, as it was written.

There are two forms of breach: minor and material. A minor breach of contract is involved when the other party received the item or service as promised, even though the other party did not fulfill a part of the agreement in some way. A material breach happens when the other party did not receive the item of service they were promised.

This information is intended to educate and should not be used as legal advice.