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What is Breach of Contract?
Meg hired Paul to build a swimming pool in her backyard.
She made it clear to him that she wants a blue liner with a specific design and thickness for her pool.
They signed a contract that details the specification and scope of work.
Paul ordered the liner from Todd, the liner manufacturer. But Todd never made the liner.
So Paul installed a black thin plastic instead of a blue liner that Meg wants and did not inform her.
Did Paul breach the contract? The answer is YES!
A Breach of Contract will occur if any of the terms of the contract are not met.
There are different types of breaches. Paul used a thin plastic which is not
Different Types of Breaches
intended to stand the rigors of the pool and can't be expected to last long as compared to a liner.
This is a MATERIAL BREACH and Meg can sue Paul and recover Material Breach
the cost to correct the breach which includes removing the thin plastic and replacing it with the agreed liner.
If Meg wants a blue liner for the pool and
Paul installed a black liner with the same design and thickness, then it will only be a MINOR BREACH since the color of the liner has no effect on the pool's Minor Breach functionality.
Meg cannot sue Paul for a Breach of Contract because there are no actual damages incurred from using a liner of different color.
Meg may however collect from Paul the price difference if the black liner is cheaper than the blue one.
Since Todd never made the liner, Paul can sue him for a FUNDAMENTAL BREACH
Fundamental Breach
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as he failed to uphold his part of the contract. Paul was unable to make Meg's swimming pool according to what was agreed, so Meg could withhold payment. Paul is losing the money he would have made in building Meg swimming pool.
In the contract, Paul laid out specific tasks that he will accomplish on a weekly basis. If Paul fails to accomplish the tasks on time, Meg can file a lawsuit based on ANTICIPATORY BREACH.
Anticipatory Breach
Meg can say Paul's failure to keep up with his weekly tasks makes it clear that he
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does not intend to live up to his part of the agreement. There are remedies for
Remedies for Breach of Contract
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a Breach of Contract. Meg can be awarded MONETARY DAMAGES to
Monetary Damages
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compensate for any financial loss that she endured due to Paul's breach.
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The court can also order RESTITUTION which is designed to put the
Restitution
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non-breaching party, in this case Meg, in a position as if the contract never took
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place. The court may also order SPECIFIC PERFORMANCE which can force Paul to
Specific Performance
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finish the swimming pool as what was agreed in the contract. However, this will
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only occur if it is not possible to remedy the situation with typical
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monetary compensation.
A verbal agreement can still be legally enforceable but it is best to put them in writing so there will be proof in court if a legal remedy is necessary.
Contracts involving sale or land transfer and obligations on debt payments must be in writing to be enforceable.
In the event of a breach, you Do if the Contract has been Breached
should take the following steps.
First, read the contract and check if there are
instructions as to what you should do if a breach occurs. Second, let the breaching party know that a breach has occurred so they can verify.
Third, discuss the situation with a breaching party if a settlement is possible.
If you need to bring the matter to court, contact a lawyer right away.
Remember, each state has different steps and deadlines for a breach of contract claim, so it is important to check with a knowledgeable business attorney in your state to know what to do in your situation.
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