A breach of contract is the violation of the conditions given under a binding contract. The breach can be anything from minor to serious such as from late payment to failure to deliver the Asset. The contract law gives suitable conditions for the performance of the contract. But when there is any breach, it also gives the remedies for breach of contract. There are various types of a breach like the anticipatory breach of contract.
After the formation of a contract, the breach of contract can happen in both a written contract as well as an oral contract and the parties involved in the breach can solve the issue among themselves, in court or with the help of arbitration.
For example, if a person name A makes a contract with B to deliver his goods on 3 September, but, fails to deliver goods on the same day, has done breach.
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Breach of Contract
The breach can be either a complete or partial breach. When a case is filed in court, the court will assess whether it was a partial breach of the complete breach, because, it will help the court to determine that what types of damage should be paid by the breaching party. To successfully claim the breach of contract, it becomes important to prove that the breach occurred.
Breach of Contract Meaning
It is a legal term that is used in contract law in the event where a party to a valid contract fails, breaks or refuses to fulfil the promise or terms and conditions given in the binding contract. Like, if the contract contains the terms and conditions that the party or parties must do and how they should do the work to fulfil the contract, but the party fails to apply these conditions shall be considered as a breach of contract. In that situation, the non-breaching party is allowed to file a lawsuit against the breached party in court.
When the non-breaching party claims a breach of contract, the court must answer the following questions given below:
- Did a legal contract exist?
- If the contract exists, what was the terms and conditions of the contract?
- Was the contract modified after making the contract?
- Is the claiming breach of contract occur?
- What is the defence of the breaching party?
- What damages are caused by the breached party?
What is a contract?
A contract is an agreement between two or more two parties that created the legal obligations. The contract can be either written or oral. However, you should avoid the oral contract because it becomes more challenging to enforce the oral contract, though it is still a valid contract.
Essentials of a valid contract
There are some essential of a valid contract that must be present in an agreement to become a valid contract, which are:
- An offer
- Acceptance of the offer
- Promise to perform the contract
- Lawful consideration
- The date or time when the performance must be done
- Terms and conditions for the performance of the contract
- Free consent of the parties
- Performance of the contract or delivery of the asset
You can read our article on Essential elements of a valid contract
Section 37 of the Indian Contract Act
According to section 37 of the Indian Contract Act, the parties to the contract are binding under the obligation to perform the terms and conditions given under the contract made between two or more than two parties in the contract, unless such terms and conditions are excused under the provision any Indian law.
Types of breach of contract under Indian contract act
It is a risk that is faced by anyone who enters into a legal contract. If you deal with many agreements at the same time, then it becomes common that you will face them. Here are the main types of breach of contract:
- Minor breach of
- A material breach
- Actual breach
- Anticipatory breach of contract
A minor breach is when one party received the product which was deliverable but the other party was failed to fulfil the part of their obligation. For example: if you order me to fix your house window by changing it with a new wind-resistant window, but I just fix a new simple window, this will come under a minor breach. But if there is no difference in the price of both windows, then you cannot claim it.
Material breach of contract
It occurs when there is serious failure to perform the part of the contract that allows the other party to ask for the damages because the breach has occurred. For example, if, it is written in the contract that this window should be used in the house, but I use the simple window, but the window break, then you can ask me for the damages to replace this window with a wind-resistant window.
Actual breach of contract
The actual breach is when either of the party to the contract is refuses to perform their obligation on the due date is called an actual breach. It means the promisor party refuses to perform the promise which has to be fulfilled on the due date.
For example, Sohan make contracts with Mohan that he will buy his goods on 16th November of 5000. But on 16th November, he refuses to take his goods; it was called the actual breach.
Anticipatory breach of contract
The anticipatory breach of contract is the breach where the breach occurs but before the due date of performance. In this type, the one-party announces, in advance (before the due date) that he is not going to fulfil his side of which was mentioned in the contract.
Example: A promises B on 10th December that he will give 1000 units of his products on 26 January, and he will charge 100rs per unit. Now, on 1st January, A said B that he cannot give him products. Here, A refuses to give his product before the due date which was 26th January. This is called the anticipatory breach of contract.
Section 73 of the Indian Contract Act, 1872
It is covered under section 73 of the Indian contract act that, when a legal contract has been broken by either of the party to the contract, the suffering party is entitled to ask for compensation from the breached party.
Read our article on 5 usual Remedies for Breach of Contract
A breach in a contract is an event that can happen during the performance of the contract. So, it becomes more important to understand the terms and conditions of the contract before entering into the contract, otherwise, you may be getting in trouble to pay for the damages done by you.