Whenever there is a rule, someone will break it. Contracts are often broken, but this does not have to be a big deal if they are handled the right way. Rules need to be enforced because letting people choose what to do with them is not a good way to run a smooth, productive society, organization, or family.

With contract obligations, it’s the same thing. In essence, they are the rules of a contract. They spell out the different parts of an agreement between two parties in order to get something done.

When you don’t do what you agreed to in a contract, this is called a contract breach, and it can lead to a contract dispute. There are consequences for breaking these rules, just like there are for breaking other rules.

Who is a contract lawyer?

A contract lawyer is a type of lawyer who focuses on contract law and spends a lot of time writing and reviewing legal contracts. Some people call these lawyers “desk lawyers” because they spend most of their time behind a desk and not in court. Legal contracts are the most important part of any business because they set the rules for how the business works with its clients, suppliers, employees, and shareholders. Because of this, it’s important to have a good contract lawyer on your team.

What is a breach of Contract?

Most of the time, a party breaches a contract when they don’t do what they’re supposed to do by a certain time. This can happen by accident or on purpose, when someone refuses, when they don’t pay attention, or when someone else gets in the way.

Non-performance can be in whole or in part, or it can be less than what is needed to meet standards, express or implied warranties, or other agreed-upon levels of performance of some kind.

In the contract, the parties can decide to limit or apply specific liabilities or remedies for certain types of breach.

But if they don’t do this, there may be default rules from the outside that make the party in breach liable for anything. In most countries, the legal system has ways to deal with contract breaches that aren’t mentioned in the contract itself. The party that breaks these rules can get into a lot of trouble.

Examples of a breach of contract

There are some common ways to break a contract, and they can be classified into two main groups.

This shows the relative “when” of a breach of contract: 

Breaking the contract in real life: A contract violation has already happened—the service wasn’t done on the agreed-upon date—or is happening now—work is being done on the property without permission.

Breaking a contract ahead of time: According to information that came from the responsible party before the agreed-upon time for performance of the relevant obligations, the contract will be broken. The parts will not be delivered next week as promised.

1. Seriousness

This attribute sorts the real, expected, or possible consequences of breaking a contract:

Breaking the contract in a big way. A big, bad consequence for breaking a contract. Most of the time, these kinds of breaches are caused by the non-performance of an essential or fundamental term of the contract. 

This is a term that is so important that its non-performance might be covered in the contract itself, and its happening can be seen as a failure to respect the rules set in the contract. If a party didn’t get the order to the ship before it left, it could be seen as a material breach if the order was important and the ship wasn’t able to sail.

Small breaches of the agreement. Any breach of contract that isn’t a big deal but is still worrying. If a party doesn’t pay an invoice by the due date, it could be seen as a small breach that causes interest to be added to the amount owed until the payment is made.

2. Remedies

Some ways in which a contract is broken might be specifically mentioned in the  contract. The party that broke the terms of the contract might have to fix the problem within a certain amount of time or face agreed-upon consequences, which could include contract termination.

On the other hand, if there was a specific remedy for a more general “material breach,” the contract could be ended right away.

The last option is to go to court, where the party who didn’t break the contract sues the party who did. If a court finds the breach to be true, it can do a few things to fix it.

3. Damages

Damages are the amounts that the court says the party who broke the law needs to pay to the party who didn’t break the law.

A loss can include relevant costs that the non-breaching party had to pay or benefits that it gave to the breaching party in the hope of getting paid back.

Note that any part the non-breaching party played in the breach will be taken into account when figuring out the amount of damages.

Damages can be given in different ways, depending on which country’s laws are being used. These are the most common types of damages:

4. Compensatory

Damages are given to make up for what was lost. In legal terms, the goal of this award is to put the party who didn’t break the rules in the same financial position they would be if the party who broke the rules had done what was required.

5. Liquidated

Damages that are agreed upon by both parties in the contract and are due in the case of a breach. If it can be proven that there was a breach and that the amount of liquidated damages is a reasonable estimate of the loss and not a punishment for the breach, the court doesn’t have to figure out how much money should be given as damages.

6. Loss of opportunity 

Damages are given when it can be shown that the other party lost a chance to make money when the party who broke the contract did not do what they were supposed to do.

7. Nominal

 A small amount of damages is given to show that even though the contract was broken, it didn’t cause the other party any real harm. Reliance loss is when the non-breaching party gets money to cover the costs it incurred because it thought the breaching party would keep its promises.

Conclusion

A contract is the source of a set of rights and responsibilities for each party, and it would be worthless if there was no legal way for the hurt party to get compensated  for any damages or loss. There are a few ways to fix a broken contract, which is good news. These can range from making sure the contract is followed henceforth to paying the offended party for the damages incurred.