What Are the Causes of an Action for Breach of Contract?

Breach of contract is a cause of action, or grounds to bring a lawsuit against another party to the contract. What constitutes a breach of contract depends on the terms of the contract, but there are several distinct categories of breach.

Anticipatory Breach

One type of breach of contract doesn't actually involve an actual breach at all. It is called anticipatory breach because it occurs when one party to a contract makes representations that it will not perform its duties as detailed in the document, or that such a situation is inevitable. Simply saying you intend to breach a contract is a cause of action for the other party, who might experience significant problems if the expected actions under the contract don't occur.

Minor Breach

A minor breach, also called a partial or immaterial breach, occurs when performance of the contract occurs but is unsatisfactory. The legal remedy for minor breach usually is compensation for the resulting damages, most times limited to the difference in value between the expected performance and the actual performance. The classic case of minor breach is a construction job where hidden, nonaesthetic aspects of the job were not installed in the specified color. In this case, because there was no difference in actual value between the items of one color or another, even though there was a minor breach, no damages were awarded.

Material Breach

A material breach is a more serious version of a minor breach. A material breach is one where the performance or nonperformance of the breaching party defeats the purpose for the contract. If a person is found guilty of a material breach, he may be required to pay damages or to meet the requirements of the contract.

Fundamental Breach

A fundamental breach is one where a fundamental term of the contract has been violated. The problem is so serious that the entire contract can be invalidated and damages awarded. If, for example, you hired a contractor to build a privacy wall around your yard, a minor breach would be if it was built a few inches too low. Most likely, though, it would still fit the intended purpose. A fundamental breach would be if the builder installed a chain-link fence.

Considerations

Breach of contract, as a cause of action, generally does not permit for punitive damages, which are damages designed to punish someone. The compensatory damages to which a nonbreaching party may be entitled must be limited as much as possible.