We often enter into various agreements, contracts and memorandum of understanding before pursuing any business or service arrangement. An agreement defines and confines the role of the either party to avoid any future legal course of action due to breach of the agreement. The party to such an agreement incorporates the entire extent of the work to be performed by each party along with the rights and liabilities arising out of the subject matter of arrangement. Most of the Agreements also inculcate the mode of dispute resolution arose between the parties via mediation, arbitration or any other mode as agreed upon between the parties.Yet there are instances where one or the party violates or breaches the agreement.
Breach of contract is a legal cause of action and a type of civil wrong, 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. Breach occurs when a party to a contract fails to fulfill its obligation(s) as described in the contract, or communicates an intent to fail the obligation or otherwise appears not to be able to perform its obligation under the contract.
It also referred to as partial breach, it is a breach of contract that is less severe than a material breach and it gives the harmed party the right to sue for damages but does not usually excuse him from further performance. For example- A and B entered into an agreement with C to manufacture a car as per the design and interior suggested by A and B. One of the terms of the agreements says that C will use bullet proof glass in making the car. C exactly made the car as per the specifications and design suggested by A and B, but did not use the bullet proof glass while making the Car. C has basically performed the contract with a minor accidental breach of contract and therefore C is only liable towards the cost of damages which would be the cost of replacement of bullet proof glasses with the normal one.
Any substantial breach in the terms of the contract can be said as a material breach. The consequences of such breach are quite major and significant and the term of the contract which has been breached is a condition to that contract. Essentially, a material breach does two things. First, it gives rise to an immediate cause of action against the breaching party and, second, it excuses the innocent party from performing.For example- A gives contract to B for supply of a particular type of cloth with a condition that the cloth must be supplied to A by 01/06/2019, as on 04/06/2019 there is a fashion show in which the model will wear the dress made up from that material and it will take 3 days to stitch that dress by A. B supplied the same quality of cloth to A but on 02/06/2019 instead of 01/06/2019 as promised. In this case A can sue b for the breach and furthermore A can deny making the payment for the delayed delivery of the cloth.
when one party stops fulfilling his or her part of the deal, which makes the other party believe the agreed upon details will remain incomplete. An anticipatory breach gives the innocent party the option to immediately terminate the contract and sue for damages, or wait for the time of performance: if the party required to perform does not perform when required by the contract, the innocent party can terminate the contract. For example- A agrees to B to supply certain goods on 01/04/2019, on 15/03/2019, A denies to supply the said goods to B on 01/04/2019. B may immediately consider the breach to have occurred and file a suit for damages for the scheduled performance, even though A has until May 1 to perform. However, a unique feature of anticipatory breach is that if an aggrieved party chooses not to accept a repudiation occurring before the time set for performance, not only will the contract continue on foot, but also there will be no right to damages unless and until an actual breach occurs.
When either party fails to meet the obligations stated in the contract when the performance is due is called as Actual breach of contract.This kind of breach occurs when the guilty party breaches the contract’s essential conditions. For example- A agrees to B to supply goods against the agreed sum of Rs. 10,000. A supplied the goods as and when demand raised by B, but B refused to pay the amount as agreed in between.