A breach of contract is classified as a material breach and a non-material breach. Knowing the type of breach of contract in commercial litigation is important for determining the magnitude of the breach and the most effective legal actions to take.
In contract law, a material breach of contract violates the core terms of the contract and potentially voids the entire agreement. This deprives the non-breaching party of the benefit of the contract. It is a serious breach of contract and allows the violated party to take legal action. Some things that point to a material breach of contract are a violation of the basic terms and conditions of a contract include the failure to deliver goods or services as promised, a failure to pay for goods or services as agreed, a failure to perform the work or services in a timely manner and a failure to meet quality standards or specifications, that results in significant financial loss for the non-breaching party.
A Non-material breach, also called a Minor Breach, is a less significant violation of the contract that do not go to the core of the agreement. Examples of non-material breaches include: a minor delays in performance, minor variations from the specifications, and failure to provide timely notice of changes in the scope of work. Minor contract breaches are usually resolved outside the court.
Under New York Law when a breach of contract occurs, the non-breaching party may be entitled to various remedies. The most common remedies are, monetary damages such as the recovery of damages for any financial losses suffered as a result of the breach, the cost of the goods or services not delivered, lost profits, and other expenses incurred as a result of the breach.
The non-breaching party may also seek: Specific performance: this is where the non-breaching party may be entitled to an order requiring the breaching party to fulfill its obligations under the contract, or Rescission: where the non-breaching party may be entitled to rescind the contract, which means that the parties are released from their obligations under the agreement.
There is also an Anticipatory Breach of contract also known as an Anticipatory Repudiation occurs when one party to the contract announces directly or through its actions that it plans to not deliver its part of the contract within the agreed time for that contract. Usually, the breached party can seek compensation for the financial losses the anticipatory breach of contract causes.
A Breach of Contract can have serious consequences for all parties to the contract. If you have been the party that has been harmed by the breach you should contact an experienced commercial contract attorney.
