1. Existence of a Valid Contract
For there to be any breach at all, there must first be a valid contract. The contract does not need to be in writing. Oral contracts are enforceable if a party can prove their existence. To prove the existence of an enforceable contract, a party must establish three elements:
Offer – this can simply be an intention to enter a contract. However, not all discussions of future deals will be offers. For example, an advertisement will probably not be considered an offer.
Acceptance – this means the parties have genuinely agreed to all of the contract's essential terms. This is an area of the law where written contracts are preferable to oral contracts. Written contracts tend to be a more clear expression of the essential terms each party has accepted.
Consideration – this means each party must have given and received something of value. Put generally, a unilateral promise is probably not an enforceable contract; neither is a contract based on services rendered in the past.
2. Breach of the Contract's Terms
Generally, a breach occurs when a contractual promise is broken. However, not every term of the contract must be taken literally. Only a breach of contract that detracts value from non-breaching party can warrant a lawsuit. Such instances are considered material breaches. Breaches of contract that do not take away value from agreement are considered minor breaches and are highly unlikely to succeed as a lawsuit.
There are also other types of breaches. A fundamental breach is a breach that breaks a fundamental aspect of the agreement, an aspect so important that the wronged party can terminate the fulfillment of the contract. An anticipatory breach is where one party has every reason to suspect that the other party will breach, even if they have not yet, so they repudiate their part of the agreement first.
3. Damages for Breach of Contract
To recover for breach of contract, a party must prove that the other party harmed them in some way. This is referred to as damages. Damages cover money lost, but may also include time lost as well. In general, the breaching party must pay for any expenses incurred because of the violation. In addition, the breaching party can also be ordered to pay punitive damages Punitive damages are punishment for the party breaking the contract. If the contract itself states any additional payments made to a party should the contract be broken, the terms on that contract may also be fulfilled in addition to what a court awards.
If possible, the offending party can also be ordered to complete the terms of the contract. Alternatively, the wronged party may ask the court to void the contract and restore the position the wronged party was in before entering the contract.
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