What Are Types of Breach of

Contract in Business Law?

Types of breach of contract in business law include the various ways
an agreement between two business entities can be broken.3 min read
Types of breach of contract in business law include the various ways
an agreement between two business entities can be broken. A breach
can only occur if a valid contract exists.

Elements of a Valid Contract

Both written and oral contracts are valid if they include all three
required elements:

 An offer of value in exchange for goods or services has been

made with intention.
 The offer was accepted by the other party.
 Each party provides consideration or an item of value. If only one
party provides consideration, it constitutes a gift, which is not
enforceable in court.

Breach of Contract
A party breaches a contract if he or she does not complete one or more
of its terms. This could include but is not limited to:

 Failure to complete the job

 Failure to provide goods or services as agreed
 Failure to pay on time
 Provision of inferior goods or services

Think of a breach of contract as a broken promise. This is one of the

most common types of U.S. lawsuits. Courts offer various remedies for
breach of contract. They are designed not to punish the party who has
breached the contract but to return the injured party to his or her
position before the breach occurred.
The aggrieved party can also ask the judge to cancel the contract. In
some cases, the judge will order specific performance from the party
who has breached the contract.

Partial Breach
A partial breach occurs when some but not all of the contract terms
have been performed. In this case, the injured party can sue only for
actual damages. For example, if a homeowner asks for a pond with a
black liner installed and instead gets a blue liner, he or she can only
sue for the price difference between the liner colors. The contractor
cannot be required to remove the pond and start over because the liner
color does not affect the pond's function. If no difference in price
exists between the liner colors, no breach has occurred.

Material Breach
If a party fails to perform contractual duties in a way that destroys the
value of a contract, this constitutes material breach. Consider the
above example. If the contractor used inferior quality plastic rather
than simply a different color, the court may order that the pool be
removed and the liner replaced.
In a material breach, the party who has been injured can sue for
damages and may also be relieved of his or her own contractual
obligations. If a contract is completely broken, it may be called a
repudiatory or fundamental breach. A material breach has occurred if:

 The injured party has been deprived of benefits he or she

expected to receive under the contract
 It is possible to adequately compensate that party for the lost
benefits
 The breaching party will suffer forfeiture
 The breaching party is willing to complete the contract as agreed
 The behavior of the breaching party has generally been
associated with good faith and fair dealing

Anticipatory Breach of Contract

This type of breach occurs when one party no longer acts in
accordance with contract terms, causing the other party to believe he
or she does not intend to fulfill the agreement. This impression is given
by a failure to act, such as not providing an item as ordered, refusing to
take payment, or otherwise indicating he or she cannot or will not
fulfill the contract terms.
An injured party can sue for anticipatory breach before an actual
breach occurs. For example, if you sell an item to someone and agree
on a purchase price, and then that person indicates they can't come up
with the money, you may be able to sue for breach of contract or sell
the item to someone else.
Fundamental Breach of Contract
With this type of breach, the injured party can opt to terminate the
contract and/or sue the breaching party for damages. This is a
substantial breach in which a fundamental part of the contract has not
been performed. In some cases, the injured party may be entitled to
specific performance.