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Breach of Contract: Laws, types and Remedies

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A contract serves as a backbone for fair business transactions, that outlines the party's rights, obligations and expectations. Breach of Contract is the violation of a contract by any of the binding parties. The binding parties are those who have agreed and signed upon the terms and conditions of the agreement. Therefore, anything that goes out to the contract is considered a breach of it. However, Breach of contract does not necessarily occur in written contracts, and oral contracts also fall under the same.

In this article, we will discuss all about the breach of contract, its types, causes, legal remedies and prevention to avoid contract breach. Having a better understanding of contract breaches and its remedies helps to prevent our business from several consequences. At Litem Legalis, we understand the complexities of contract breach, whether it’s actual or anticipatory. Take proactive steps to mitigate risks and handle braces with confidence by connecting with us.

Basic Understanding

Contract:

The contract is a legal binding between two or more parties that outlines the rights, roles, obligations or more things. It covers a wide range of transactions such as - business deals, lease sales of goods and services, employment agreements and more. A contract must typically contain certain elements, such as an offer, acceptance, consideration, legality of purpose, and capacity of the parties.

Breach of Contract:

Breach of Contract, which means the violation of terms that the binding parties agreed on while signing the contract. Contracts are legally binding agreements, and when any of the parties fail to follow its terms and conditions, it is said to be a Breach of Contract.

Law on Contract Breach:

  • The Sale of Goods Act, 1930:   As per sections 55 and 56 of the Act, the seller can sue for the price(low or unpaid) of the good or ask for damages for the incompletion of the contract. Sections 57, 58, and 59 allow buyers to seek damages for late or non-delivery of goods, damages for breach of contract, and other specific performance as well.

  • The Indian Contract Act, 1872:  Section 39 of the act allows one party to end the contract when another party refuses or is unable to complete the agreement as per the conditions of the contract. Sections 73, 74, and 75 define the consequences of breach of contract.

Types of Breach of Contract

There are four types of breach of contract. These are as follows:

  1. Minor Breach: In the contract, the roles and responsibilities of the involved parties are clearly mentioned. Unfortunately, one party fails to fulfil a minor or small insignificant part of their responsibilities said to be a Minor breach of contract. This breach is also known as a Partial Breach and Immaterial Breach. A breach of contract may inconvenience the non-breaching party, but it does not prevent them from fulfilling their own obligations. However, the non-breaching party have the right to file sue for damages caused by the breach.
  2. Material Breach: The material breach of a contract is a serious and substantial failure by one party to fulfil a fundamental obligation. Unlike minor breaches, material breaches cause substantial harm to the other party, depriving them of the benefits they were expecting. An individual who breaches a contract may seek legal remedies, such as suing for damages or terminating the agreement when the contract is materially breached.
  3. Anticipatory Breach:Anticipatory Breach occurs when either of the parties acknowledges its inefficiency in fulfilling the contract before the end of the agreed time frame. The party can do so by directly informing the other party or by showing significant gestures. This Breach has not taken place yet but is a high chance of happening soon.
  4. Actual Breach:When one party fails to perform their obligations under a contract at the time specified, it is known as an Actual Breach. Actual breaches occur after the performance deadline has passed, unlike anticipatory breaches which occur before the performance is due.

Legal Remedies for Contract Breach

  • Rescission of Contract:

    Rescission of the cancellation of the contract. It generally cancels the contract with the mutual agreement of both parties. After this, none of the parties will be bound to the terms of the contract as it simply sets them free from the contract. Contracts sometimes contain rescission provisions as well.


  • Sues for Damage:

    The party can sue the breacher for damages in court against the Breach of contract. The most common remedy in breach cases is a monetary award to the plaintiff.


  • Injunction:

    An injunction is a court ordering one party to stop a certain set of actions related to the contract. It may be temporary or permanent depending upon the circumstances of the case.


  • Quantum Meruit:

    Quantum Meruit involves cases where one party gets the benefit of the duty fulfilled by another party but now they are unable to perform their part of the contract or somehow stop another party from completing the contract. In those cases, the court may grant quantum merit to the party in which they get paid in proportion to the work done.

Actions to Take in the Case of a Breach

Step 1: Review the Contract

Examine the contract in concern in detail first. Determine the precise terms, conditions, and responsibilities mentioned in the contract. This step aids in figuring out the contract's parameters and if a breach has happened. Observe closely to all pertinent provisions, including payment terms, deliverables, and deadlines.

Step 2: Documents of Breach

Start recording the specifics as quickly as you believe there has been a breach. Get all the evidence you need to back up your claim, including communications (letters, emails, and messages), contracts, transaction records, and any other relevant data. Having a clear record of the events in case legal action is required is provided by documenting the breach, which also helps to enhance your case.

Step 3: Attempt Resolution

Consider trying to work out a solution with the other person directly before taking things further. Establish clear channels of contact and professionally and clearly express your concerns over the claimed violation. Try to come to a compromise that will benefit both parties by talking through possible alternatives. Business relationships may be maintained and time and money can be saved by resolving conflicts sincerely.

Step 4: Seek Legal Consultation

If attempts to resolve the breach informally are unsuccessful or if the breach is significant, it may be advisable to seek professional legal advice. An experienced attorney specialising in contract law can review the details of the breach, assess the strength of your case, and provide guidance on the best course of action. Legal counsel can help you understand your rights, explore options for resolution, and represent your interests effectively if the matter escalates to litigation or arbitration.

How can Litem Legalis Help you?

The cases of Breach of the contract are quite complex and complicated. You can’t even figure out where to file the case and against whom. The suits against the breacher can be filed at the district court, respective tribunals, or any other law-binding firm. For filing any such suit, you would need an experienced advocate with years of expertise in civil matters. With Litem, you can get in touch with one of them at very ease.

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Frequently Asked Questions

Breach of Contract is the violation of a contract by any of the binding parties. The binding parties have agreed upon the terms and conditions of the agreement and signed it. Therefore, anything that goes out to the contract considers being a breach.

Breach of Contract can happen in many ways. If any of the terms mentioned in the contract is violated, it becomes a breach. Based on the same, the Breach of contract has been divided into four types, namely:

  1. Actual Breach
  2. Material Breach
  3. Minor Breach
  4. Anticipatory Breach

No, breaching the contract is not illegal.

Depending upon the circumstances there are different remedies one can avail of in case of breach of contract. One can seek for the termination of the contract, claim for damages, and sometimes even quantum meruit can also be granted in the case.