Contracts are legal documents that bind two or more parties into a set of obligations provided in an agreement. Knowing what your contractual rights are can be useful. Additionally, understanding how a valid contract is formed comes in handy during the enforcement phase.
Once a contract is signed into an agreement, there is a sense of good faith between the parties that should create a partnership. However, in reality, disputes and conflicts occur in contracts through a breach of the contract. When this takes place, remedies are available for the parties in dispute.
Contracts cover a vast range of topics and can encompass a variety of duties. A contract can be purchasing a car or a home. Marriage is also a contract between two people. However, if either party fails to fulfill their contractual obligations as defined in the contract, there is a breach of the contract. Some examples of the breaches include:
- Failure to perform;
- Failing to abide by the terms of the contract;
- Inability to perform on the specified time frame of the agreement.
Different types of breaches can occur in a situation. An anticipatory breach happens when the contract goes in a bad direction, but there is still time before the deadline. Another type is mutual rescission, meaning that both parties mutually agree to not agree anymore.
What Is the Difference Between the Anticipatory Breach vs. Actual Breach?
There is a difference between the anticipatory and actual breaches. An actual breach happens when one person decides to not fulfill their side of the bargain on the due date or performs incompletely. In contrast, the anticipatory breach happens when one party communicates in advance that they will not be able to fulfill their side of the contract. Either way, both result in a breach because the contract terms were not completed as originally intended.
Failing to meet the contract requirements can result in both a loss of time and money. Each organization and business has to operate with certain standards while fulfilling their obligations on the agreement. However, if a break does occur, there are legal remedies for the parties to claim. There are several forms of damages available to the party that suffered the losses from the breach in the contract.
What Is the Difference Between a Minor Breach vs. A Material Breach?
Not all breaches are material, meaning they do not drastically impact the initial contract terms. In general, breaches of contract can either be minor or material. Most likely, a breach is material if one party ends up with something significantly different than what was specified in the contract.
For instance, if the contract specified that apples be delivered to the customer, but instead, lemons were delivered, this would be considered a material breach. Generally, a material breach implies that the non-breaching party is no longer required to perform their end of the deal and now has the right to a remedy.
However, a minor breach does not significantly impact the terms of the original agreement. A minor breach is usually when one party fails to perform some part of the contract even though the specified item or service was ultimately delivered. So long as the final product met all the client’s demands but was completed a day after it was requested, the breach might be considered minor. However, if the time was specified in the contract and urgent delivery was needed, this could be more than a minor breach.
Do All Contracts Need to Be In Writing?
There are some rules when it comes to the validity of contracts. Some contracts under the law are only valid if they are written, but not all contracts need to be in writing. The state statutes that require certain contracts to be in writing are called statutes of fraud. Oral contracts are considered valid and can be enforceable as written contracts.
The Statutes of Frauds mandate that either the contract itself be in writing and signed by the parties or there must be a sufficient memorandum of the agreement signed by the party being sued for breach of contract.
What Are Common Legal Defenses for Contract Cases?
There are some commonly used legal defenses for contract cases. Below is a summary of these defenses and what they entail. A minor cannot agree on their own because they lack the legal capacity to do so. Therefore, a party can argue that they lacked the legal capacity to enter a contractual agreement. Besides minors, persons with mental disabilities and individuals who are coerced or under duress cannot enter into contracts on their own.
Each state has statutes of limitations, which are regulations set as deadlines for bringing a lawsuit. Once the deadline passes, that person is barred from filing that claim in court. In some cases, the party accused of breaching a contract can point out the fact that the deadline for a lawsuit has passed.
Additionally, the statute of fraud, as stated earlier, is a law that mandates certain types of contracts to be in writing. For instance, contracts dealing with real estate must be in writing and signed by both parties. If these are not in writing, they will not be valid and cannot be enforced in court. Moreover, if you breached an oral contract that was supposed to be in writing under the statute of frauds, you can argue the contract was invalid in the first place because it violated the statute of frauds.
Furthermore, in some situations, both parties are mistaken regarding the contract’s essential terms, and the parties can use this excuse to terminate the contract. In other scenarios, there is a lack of consideration, meaning nothing was exchanged of value. That thing of value is known as “consideration.” If there is no consideration, a valid contract does not exist.
Another defense could be impossibility, impracticability, or frustration with the purpose of the contract. In general, these defenses imply that the breaching party could not perform their contractual obligations due to factors beyond their control. It became impossible for them to perform and impractical in the situation. This is determined on a case-by-case analysis and is highly fact-sensitive.
If a party makes a certain statement regarding their service for the contract, it should be acted upon in good faith. This scenario alludes to the estoppel excuse. The party cannot retract later and claim the act was a breach. The party accused of a breach can point to the first party’s earlier statements accepting the new terms and argue they are “stopped” from making a breach of contract claim.
Lastly, If a contract is based on misrepresentation, coercion, or undue influence, it is considered invalid. Illegality. If the contract outlines illegal activities to do, it is also invalid and not enforceable. The breaching party could argue that the contract was illegal based on the terms of the contract. Furthermore, if a contract consists of unfair bargaining power between the contracting parties or other unfair or manipulative practices, it may be deemed unconscionable and invalid.
When Do I Need to Contact a Lawyer?
Contract breaches occur throughout business deals and planning on how to resolve them can be challenging. There are different types of breaches and depending on the contract it can greatly impact the outcome of the parties’s relationship. If you have issues with your contract or there has been a breach in the contract, you can seek assistance from a local contract lawyer for your case.
