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Contract law
Part of the common law series
Contract formation
Offer and acceptance Mailbox rule Mirror image rule Invitation to treat Firm offer Consideration
Lack of capacity Duress Undue influence Illusory promise Statute of frauds Non est factum
Contract interpretation
Mistake Misrepresentation Frustration of purpose Impossibility Impracticability Illegality Unclean hands Unconscionability Accord and satisfaction
Breach of contract
Remedies
Quasi-contractual obligations
Tort law Property law Wills, trusts and estates Criminal law Evidence
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Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance. If the party does not fulfill his contractual promise, or has given information to the other party that he will not perform his duty as mentioned in the contract or if by his action and conduct he seems to be unable to perform the contract, he is said to breach the contract.
Contents
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1 Minor breaches 2 Material breach 3 Fundamental breach 4 Anticipatory breach 5 Limits on Remedies and Damages 6 See also
A minor breach, a partial breach or an immaterial breach, occurs when the non-breaching party is unentitled to an order for performance of its obligations, but only to collect the actual amount of their damages. For example, suppose a homeowner hires a contractor to install new plumbing and insists that the pipes, which will ultimately be sealed behind the walls, be red. The contractor instead uses blue pipes that function just as well. Although the contractor breached the literal terms of the contract, the homeowner can only recover the amount of his damages. Generally, this means the difference in value between the red pipe and the blue pipe. Since the pipes are identical value, the difference is zero; therefore, there are no damages and the homeowner receives nothing. (See Jacob & Youngs v. Kent, on which this example is based.) It is important to note however, that should the specification of the pipe colour be in the agreement as a condition, the breach of that condition will be considered a major breach.
In determining whether a failure to render or to offer performance is material, the following circumstances are significant: (a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; (b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived; (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing. American Law Institute, Restatement (Second) of Contracts 241 (1981)