What is 'Breach of Contract'

A breach of contract is a violation of any of the agreed-upon terms and conditions of a binding contract. This breach could be anything from a late payment to a more serious violation such as failure to deliver a promised asset. A contract is binding and will hold weight if taken to court. Proof of the violation is imperative to successfully claim a breach of contract.

BREAKING DOWN 'Breach of Contract'

Sometimes the process for dealing with a breach of contract is written in the original contract. For example, the contract may state that in the event of a late payment a fee of $25 must be paid along with the missed payment. If the consequences for the specific violation are not included in the contract the two parties can settle the situation themselves. This can lead to a new contract or further legal action can be taken.

How a Breach of Contract Is Addressed in Court

Plaintiffs who claim there has been a breach of contract must first establish that a contract existed between the parties and demonstrate how the defendant failed to meet the requirements of that contract. A written contract that is signed by both parties is the simplest way to prove that such an agreement was made. An oral contract can be enforceable as well. Certain types of agreements still require a written contract to carry any legal weight. These contracts include the sale of goods for more than $500, the sale or transfer of land and contracts that last for more than one year after the time of the agreement.

Courts will review the responsibilities of each party in the contract to determine whether they have fulfilled their obligations. The contract will be examined to see if any modifications were made that could have triggered the alleged breach. A plaintiff is typically required to notify a defendant that they are in breach of contract before advancing to legal proceedings.

An assessment will be made by the court to determine whether or not there was a legal reason for the breach. The defendant might claim that the contract was fraudulent because of misrepresentations by the plaintiff or concealment of material facts. The defendant might claim the contract was signed under duress from the plaintiff who applied threats or used physical attacks to compel the agreement to be made. There could have been mutual errors made by both the plaintiff and the defendant that contributed to the breach.

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