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What is Breach of Contract?

Updated: February 2, 2023

Est. Reading: 4 minutes

A breach of contract can result in serious damage to the finances or reputation of a business, and a skilled attorney will be able to provide you with legal advice throughout the process of seeking reparations. Contact a qualified business attorney at Monahan Law Firm today to schedule a case consultation.

What exactly is a breach of contract? A breach of contract occurs when the terms and conditions agreed to in a contract are violated by one of the signing parties.

Due to the wide scope of agreements contracts can cover, this could include any number of actions, from something as relatively minor as a late rent payment to something far more severe such as failing to deliver agreed-upon goods or services.

Types of Breach of Contract

There are two main types of contract breach, generally classified as minor or material:

  • Minor Breach - This occurs when the delivery date for a service or good is not met. For example, if you are staging an event and a supplier you have a contract with delivers their goods late.
  • Material Breach - This occurs when the product you order is different from the product you receive. For example, if a school district places an order for math textbooks from a publisher but receives English textbooks.

Breach of contract can also be categorized as either an actual or anticipatory breach:

  • Actual Breach - This occurs when one party named in a contract fails or refuses to fully meet the terms listed in the contract.
  • Anticipatory Breach - This occurs when one party named in a contract expresses their intent to not meet the terms listed in the contract.

Consequences For a Breach of Contract

The consequences for a breach of contract can vary on a case-by-case basis, and are often written into the terms of the contract before each party signs. Common consequences include fines, restitution payments, and other material means for making up for the damage caused by a contract breach.

what is breach of contract

Contract breaches are commonly settled out of court through mediation. This may involve drafting a new contract or developing a fix for the breach within the framework of the existing agreement. If the involved parties are unable to come to an agreement that resolves the contract breach, the next step in the process should be to contact a commercial litigation firm.

If a breach occurs, you and the other parties may come together and create a new contract or a solution to the breach. If a new agreement fails to materialize, the next course of action is to appear in court or arbitration.

How to Remedy a Breach of Contract

When one party bound by a contract violates their agreement, the affected party is entitled to some form of remedy. There are 3 common types of remedies for a contract breach:

  • Damages - The party in violation of the contract may be required to provide payment to the other party.
  • Specific Performance - This remedy involves a legal ruling that enforces the terms of the original contract. Exact knowledge of the terms of the contract is necessary, as the court will require the agreement to be followed exactly as agreed.
  • Cancellation and Restitution - This involves canceling the contract following a breach, with the non-breaching party being repaid for any benefits offered prior to the breach taking place.

Statute of Limitations For a Breach of Contract in Arizona

The laws determining the statute of limitations in Arizona for breach of contract cases are simple. It is set at 6 years for contracts established within the state of Arizona and up to 6 years for contracts established outside of the state. It is also important to note that the time does not start until the affected party knows or should reasonably have known that they have taken damages as a result of the contract breach.

What to Do if a Breach of Contract Occurs

If you are dealing with a breach of contract, regardless of type, you should contact a lawyer as soon as possible. A qualified attorney will be able to determine which type of remedy will be best suited for your case, whether or not mediation or a court case are your most likely path forward, and can provide you with legal guidance and representation throughout the entire process.

Your attorney will be able to help you recover damages such as:

  • Compensatory - money paid to cover costs and help you recover losses brought about by the violation
  • Liquidated - damages that are agreed on in the contract
  • Consequential and Incidental - money awarded when all parties involved were fully aware of the risk of loss from a breach at the time the contract was signed
what is breach of contract?

You may also be able to reach agreements that extend beyond financial awards:

  • Specific performance - an order from the court requiring the participating parties to follow through with the specific terms agreed on in the contract
  • Reformation - allows for the contract to be re-written in a way that more accurately aligns with the intended outcome
  • Rescission - allows for the contract to be canceled with any payments or benefits being returned

How an Attorney Can Help With a Contract Breach

Contract breaches can have significant financial consequences for any business. Whether you have received a late delivery, an incorrect delivery, or have had a partner state their intention to violate the agreed-upon terms you will want an experienced contract attorney working with you to protect your interests.

Contract law can be a complicated subject matter, and a qualified attorney will make sure you understand your case, understand your options and common remedies for a similar breach of contract cases, and help you get the best possible result.

At Monahan Law Firm we can provide you with legal advice and representation backed by our experience in contract law. Contact us today to schedule an appointment for a free initial consultation.

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Attorney Patrick Monahan

Patrick Monahan

Patrick Monahan is the managing partner of Monahan Law Firm, PLC. Patrick began his legal career practicing real estate, construction, and general business litigation.
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