Contract Breaches

A contract is formed when parties reach an agreement and terms, either in writing or verbally, and commit to form that legal relationship and pay a consideration.

Once the contract is formed mostly things progress smoothly until a dispute arises or a person or party breaches the contract.

There are different types of breaches and may can be sorted out amicably between the parties. However, when this cannot be done you may need to obtain legal advice to assist in resolving the dispute or to seek damages or enforce the contract.

Mostly breaches by one party occurs for the various reasons, including:

• Does not perform in the prescribed time in the contract;
• Does not perform their duties as stated in terms of the contract; or
• Fails to perform their duties.

There are different categories of contract breaches:

Minor Breach

This is also referred to as a partial breach and is where the terms of the agreement have only been partly satisfied or delivered on. In most instances the parties would try to make good or fix the remedy and many disputes where they have suffered a financial loss due to the breach. If the party has not fulfilled their obligation then they would claim the loss from the other side.
An example of a minor breach would be where some defective work is done on a building project or where a supplier of goods has not supplied all the goods or there are missing parts from the delivery.

Remedies for minor breaches would be for the other party to agree to fix the issue. This could extend to financial compensation if a party has suffered financial loss due to the contact breach.

Material Breach

A material breach is more significant and to be a material breach there has to be a key element of the contract that hasn’t been delivered or performed. As a consequence, one party is deprived of the benefit of the contract. The breach must cause a significant or serious effect on the benefit that one party would receive.

If a material breach has occurred you could seek a variety of remedies or make good options to settle the dispute. This is a more significant type of breach and a party may be able to terminate the contract due to the breach. Again, if financial loss is incurred, as it most certainly would have, the other party could seek compensation and damages for their loss.

Anticipatory Breach

An anticipatory breach is a breach that has not yet occurred, but where one party has notified the other that they won’t fulfill their obligations under the contract. It may also be where one party does not intend or be able to fulfil their obligations under the contract.

Actual Breach of Contract

An actual breach of contract is where the breach has occurred where one party has not performed their part of the contract. This could be where goods are not delivered or unsatisfactory work being performed.