4 Types of Breach of Contract

It can be difficult to work out if a party to a contract is in breach of contract. In many circumstances, this confusion is caused by a contract that was initially poorly drafted or designed. Nevertheless, a party can breach a contract in many types of ways. In this article, we set out the four major breaches of contract that commonly occur.

1. Material Breach

The first and most severe type of breach is a ‘material’ breach (also known as a ‘fundamental breach’). Generally, a material breach of contract involves one of the key elements of the contract not being provided or undertaken as agreed.

An example of when a material breach might occur is in the context of online shopping. Imagine you purchase a complete computer package online and only receive a monitor upon delivery. In this case, the online retailer would have materially breached your contract. This is because they did not fulfil their contract with you by providing a complete computer package.

Many more complex contracts actually define what is and what is not a material breach of contract. However basic everyday contracts generally do not. Generally, upon the occurrence of a material breach, the contract will be deemed to have ended. Once this is the case, the party who has suffered from the breach will be in a position to claim remedies, including damages.

2. Minor Breach

Using the previous example of online shopping, imagine that the computer retailer delivers all the computer equipment you ordered. However, you discover that a couple of pages were missing from the user manual. This would not be a material breach, but would likely constitute a minor breach instead.

A minor breach does not lead to an immediate cancellation of the contract. But, the seller would have to remedy the breach of contract.

3. Anticipatory Breach

An anticipatory breach of contract involves one of the parties to a contract stating that they will not fulfil their side of the contract before they are due to do so. While this sort of a breach of contract is not that common, it still entitles the wronged party to remedies.

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4. Actual Breach

The final of the contractual breach types is an ‘actual breach’ of contract. This is the most common way that a party will breach a contract. Such a breach occurs when the time arrives for a party to perform their side of an agreement, and they do not perform their end of the bargain.

Key Takeaways

If you are a party to a contract that has been breached in one of the above four ways, you need to work out what remedies you can try to extract from the breaching party. A LegalVision contract lawyer can assist you. Get in touch on 1300 544 755 or by filling out the form on this page.