Breach of contract
Barron's Insurance Dictionary:
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Breach of Contract
Failure of a party (not having a legal excuse) to perform in accordance with a promise made. An insurance policy consists of legally enforceable promises made by the insurance company (insurer) only. No such promises are made by the insured. This is the reason why the insurance policy is a unilateral contract.
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Barron's Real Estate Dictionary:
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Breach of contract
A violation of the terms of a legal agreement; default. Breach of contract allows the nonbreaching party to rescind the contract, sue for damages, or sue for specific performance of the contract.
Example: Baker contracts with owner Brown to purchase a property.
When the closing date arrives, Brown refuses to convey title to the property. Brown’s action is not supported by any special conditions in the sales contract and therefore constitutes a breach of contract. Baker may rescind the contract and recover his deposit , may sue Brown for any expenses and damages incurred, or may sue to force Brown to sell.
Example: Baker contracts with owner Brown to purchase a property.
When the closing date arrives, Brown refuses to convey title to the property. Brown’s action is not supported by any special conditions in the sales contract and therefore constitutes a breach of contract. Baker may rescind the contract and recover his deposit , may sue Brown for any expenses and damages incurred, or may sue to force Brown to sell.
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Barron's Law Dictionary:
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Breach of contract
A party’s failure to perform some contracted- for or agreed-upon act, or his failure to comply with a duty imposed by law which is owed to another or to society. 682 F. 2d 883, 885.
anticipatory breach
see anticipatory breach (of contract).
breach of duty
a failure to perform a duty owed to another or to society; a failure to exercise that care which a reasonable man would exercise under similar circumstances. 56 A.
498, 500.
breach of promise
failure to do what one promises, where he or she has promised it in order to induce action in another. The phrase is often used as shorthand for “breach of the promise of marriage.”
breach of the covenant of warranty
a failure of the seller’s guarantee of good title which occurs when the buyer [ covenantee ] is evicted by a person claiming under a paramount title; since it is a future covenant it is not breached until that eviction occurs; see Cribbet & Johnson, Principles of the Law of Property 244–45 (3d ed. 1989).
breach of the peace
an offense embracing “a great variety of conduct destroying or menacing public order and tranquility. It includes not only violent acts but acts and words likely to produce violence in others.” 310 U. S. 296, 308. In its broadest sense the term refers to any criminal offense (or at least any indictable offense, 207 U.S. 425).
Today the term is generally used to describe conduct which unreasonably threatens the public peace and which lacks a specific criminal label; by statute such conduct is often called “disorderly conduct” as the specific criminal offense.
See, e.g., N.Y. Penal Law §240.20.
The term has been defined by state courts as “disturbances of the public peace violative of order and decency or decorum,” 147 N.W. 2d 886, 892; “any violation of any law enacted to preserve peace and good order.” 236 P. 57, 59. It “signifies disorderly, dangerous conduct disruptive of public peace.” 261 A. 2d 731, 739. See also fighting words, slander.
breach of trust
“violation by a trustee of a duty which equity lays upon him, whether willful and fraudulent, or done through negligence, or arising through mere oversight and forgetfulness.” 150 P.
2d 604, 648.
breach of trust with fraudulent intent
“a larceny after trust, which includes all of the elements of larceny except the unlawful taking in the beginning.” 31 S.E. 2d 906, 907.
breach of warranty
“infraction of an express or implied agreement as to the title, quality, content or condition of a thing sold or bailed. ” 151 N.W. 2d 477, 482. A warranty is a guarantee and is breached when the thing so guaranteed is deficient according to the terms of the warranty. See U.C.C. §2-312 et seq.
constructive breach
this occurs when the party bound to perform does some act that disables him from performing under the contract or announces in advance of his time for performing that he has no intention to do so. This creates an anticipatory breach. 19 F. 2d 388, 389.
material breach
in contract law a breach that is substantial and operates to excuse further performance by the aggrieved party. A material breach destroys the value of the contract and gives rise to an action for breach of contract.
partial breach
a breach that gives rise to a claim for damages but that is so slight that it does not substantially impair the value of the contract to the injured party and thus does not give the injured party cause to abandon the whole contract. 11 Williston, Contracts 8–9 (4th ed. 2009). For instance, if a person contracts to buy a white yacht, and is delivered a yellow yacht, he might have to purchase the yacht and seek damages for the cost of painting the yacht white.
anticipatory breach
see anticipatory breach (of contract).
breach of duty
a failure to perform a duty owed to another or to society; a failure to exercise that care which a reasonable man would exercise under similar circumstances. 56 A.
498, 500.
breach of promise
failure to do what one promises, where he or she has promised it in order to induce action in another. The phrase is often used as shorthand for “breach of the promise of marriage.”
breach of the covenant of warranty
a failure of the seller’s guarantee of good title which occurs when the buyer [ covenantee ] is evicted by a person claiming under a paramount title; since it is a future covenant it is not breached until that eviction occurs; see Cribbet & Johnson, Principles of the Law of Property 244–45 (3d ed. 1989).
breach of the peace
an offense embracing “a great variety of conduct destroying or menacing public order and tranquility. It includes not only violent acts but acts and words likely to produce violence in others.” 310 U. S. 296, 308. In its broadest sense the term refers to any criminal offense (or at least any indictable offense, 207 U.S. 425).
Today the term is generally used to describe conduct which unreasonably threatens the public peace and which lacks a specific criminal label; by statute such conduct is often called “disorderly conduct” as the specific criminal offense.
See, e.g., N.Y. Penal Law §240.20.
The term has been defined by state courts as “disturbances of the public peace violative of order and decency or decorum,” 147 N.W. 2d 886, 892; “any violation of any law enacted to preserve peace and good order.” 236 P. 57, 59. It “signifies disorderly, dangerous conduct disruptive of public peace.” 261 A. 2d 731, 739. See also fighting words, slander.
breach of trust
“violation by a trustee of a duty which equity lays upon him, whether willful and fraudulent, or done through negligence, or arising through mere oversight and forgetfulness.” 150 P.
2d 604, 648.
breach of trust with fraudulent intent
“a larceny after trust, which includes all of the elements of larceny except the unlawful taking in the beginning.” 31 S.E. 2d 906, 907.
breach of warranty
“infraction of an express or implied agreement as to the title, quality, content or condition of a thing sold or bailed. ” 151 N.W. 2d 477, 482. A warranty is a guarantee and is breached when the thing so guaranteed is deficient according to the terms of the warranty. See U.C.C. §2-312 et seq.
constructive breach
this occurs when the party bound to perform does some act that disables him from performing under the contract or announces in advance of his time for performing that he has no intention to do so. This creates an anticipatory breach. 19 F. 2d 388, 389.
material breach
in contract law a breach that is substantial and operates to excuse further performance by the aggrieved party. A material breach destroys the value of the contract and gives rise to an action for breach of contract.
partial breach
a breach that gives rise to a claim for damages but that is so slight that it does not substantially impair the value of the contract to the injured party and thus does not give the injured party cause to abandon the whole contract. 11 Williston, Contracts 8–9 (4th ed. 2009). For instance, if a person contracts to buy a white yacht, and is delivered a yellow yacht, he might have to purchase the yacht and seek damages for the cost of painting the yacht white.
Dictionary of Cultural Literacy: Economics:
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breach of contract
Failure to live up to the terms of a contract. The failure may provoke a lawsuit, in which an aggrieved party asks a court to award financial compensation for the loss brought about by the breach.
Saunders Veterinary Dictionary:
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breach of contract
Failure to complete an agreed task. If a breach of contract can be proved the aggrieved person is entitled to compensation for loss incurred. Alternative penalties may be that the contract be completed or that other tasks be completed.
Mosby's Dental Dictionary:
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breach of contract
n
The failure, without legal excuse, to perform an obligation or duty in a contract.
Wikipedia on Answers.com:
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Breach of contract
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This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (December 2009) |
| Contract law |
|---|
| Part of the common law series |
| Contract formation |
| Defenses against formation |
| Contract interpretation |
| Excuses for non-performance |
| Rights of third parties |
| Breach of contract |
| Remedies |
| Quasi-contractual obligations |
| Related areas of law |
| Other common law areas |
Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance. If the party does not fulfill his contractual promise, or has given information to the other party that he will not perform his duty as mentioned in the contract or if by his action and conduct he seems to be unable to perform the contract, he is said to breach the contract.[1]
Breach of contract is a type of civil wrong.[2]
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Contents
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Minor breaches
In a "minor" breach (a partial breach or immaterial breach or where there has been substantial performance), the non-breaching party cannot sue for specific performance, and can only sue for actual damages.
Suppose a homeowner hires a contractor to install new plumbing and insists that the pipes, which will ultimately be hidden behind the walls, must be red. The contractor instead uses blue pipes that function just as well. Although the contractor breached the literal terms of the contract, the homeowner cannot ask a court to order the contractor to replace the blue pipes with red pipes. The homeowner can only recover the amount of his or her actual damages. In this instance, this is the difference in value between red pipe and blue pipe. Since the color of a pipe does not affect its function, the difference in value is zero. Therefore, no damages have been incurred and the homeowner would receive nothing. (See Jacob & Youngs v. Kent.)
However, had the pipe colour been specified in the agreement as a condition, a breach of that condition would constitute a "major" breach. For example, when a contract specifies time is of the essence and one party to the contract fails to meet a contractual obligation in a timely fashion, the other party could sue for damages for a major breach.
Material breach
A material breach is any failure to perform that permits the other party to the contract to either compel performance, or collect damages because of the breach. If the contractor in the above example had been instructed to use copper pipes, and instead used iron pipes that would not last as long as the copper pipes would have lasted, the homeowner can recover the cost of actually correcting the breach - taking out the iron pipes and replacing them with copper pipes.
There are exceptions to this. Legal scholars and courts often state that the owner of a house whose pipes are not the specified grade or quality (a typical hypothetical example) cannot recover the cost of replacing the pipes for the following reasons:
1. Economic waste. The law does not favor tearing down or destroying something that is valuable (almost anything with value is "valuable"). In this case, significant destruction of the house would be required to completely replace the pipes, and so the law is hesitant to enforce damages of that nature[3] .
2. Pricing in. In most cases of breach, a party to the contract simply fails to perform one or more terms. In those cases, the breaching party should have already considered the cost to perform those terms and thus "keeps" that cost when they do not perform. That party should not be entitled to keep that savings. However, in the pipe example the contractor never considered the cost of tearing down a house to fix the pipes, and so it is not reasonable to expect them to pay damages of that nature.[citation needed]
Most homeowners would be unable to collect damages that compensate them for replacing the pipes, but rather would be awarded damages that compensate them for the loss of value in the house. For example, say the house is worth $125,000 with copper and $120,000 with iron pipes. The homeowner would be able to collect the $5,000 difference, and nothing more.
The Restatement (Second) of Contracts lists the following criteria can be used to determine whether a specific failure constitutes a breach:
In determining whether a failure to render or to offer performance is material, the following circumstances are significant: (a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; (b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived; (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.
American Law Institute, Restatement (Second) of Contracts § 241 (1981)
Fundamental breach
A fundamental breach (or repudiatory breach) is a breach so fundamental that it permits the aggrieved party to terminate performance of the contract. In addition that party is entitled to sue for damages.
Anticipatory breach
A breach by anticipatory repudiation (or simply anticipatory breach) is an unequivocal indication that the party will not perform when performance is due, or a situation in which future non-performance is inevitable. An anticipatory breach gives the non-breaching party the option to treat such a breach as immediate, and, if repudiatory, to terminate the contract and sue for damages (without waiting for the breach to actually take place). For example, A contracts with B on January 1st to sell 500 quintals of wheat and to deliver it on May 1st. Subsequently, on April 15th A writes to B and says that he will not deliver the wheat. B may immediately consider the breach to have occurred and file a suit for damages without waiting until after May 1st for the scheduled performance, even though A has until May 1st to perform.
Example: if Company A refuses to pay substantial interim payments to Company B, Company B can begin legal action due to anticipatory breach. Company B could also stop performing its contractual obligation, potentially saving time and or money.
See also
References
- ^ "Law Office of Chisholm & Shuttie". http://bizlawfirm.com/all-practice-areas/breach-of-contract/.
- ^ Glanville Williams. Learning the Law. Eleventh Edition. Stevens. 1982. p. 9
- ^ "Peevyhouse v Garland Coal Mining". http://en.wikipedia.org/wiki/Peevyhouse_v._Garland_Coal_&_Mining_Co..
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Barron's Insurance Dictionary
Dictionary of Insurance Terms. Copyright © 2008 by Barron's Educational Series, Inc. All rights reserved.
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Barron's Real Estate Dictionary
Dictionary of Real Estate Terms. Copyright © 2008 by Barron's Educational Series, Inc. All rights reserved.
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Barron's Law Dictionary
Law Dictionary. Copyright © 2003 by Barron's Educational Series, Inc. All rights reserved.
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Dictionary of Cultural Literacy: Economics
The New Dictionary of Cultural Literacy, Third Edition Edited by E.D. Hirsch, Jr., Joseph F. Kett, and James Trefil. Copyright © 2002 by Houghton Mifflin Company. Published by Houghton Mifflin. All rights reserved. Read more
Saunders Veterinary Dictionary
Saunders Comprehensive Veterinary Dictionary 3rd Edition. Copyright © 2007 by D.C. Blood, V.P. Studdert and C.C. Gay, Elsevier. All rights reserved.
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Mosby's Dental Dictionary
Mosby's Dental Dictionary. Copyright © 2004 by Elsevier, Inc. All rights reserved.
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Mentioned in
Breach
(business term)
Forbearance
(business term)
Cause of Action
(business term)
Civil Liability
(business term)
Duress
(business term)
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