New York companies and residents sign contracts all the time for many different things. Even if you’ve never owned a business, you’ve likely signed a contract when you rented an apartment, signed up for a cellphone service or hired someone to do work for you. When one party in a contract fails to fulfill their obligations, it is called a breach of contract.
The four types of contract breaches
While contracts themselves are incredibly varied, business law only defines breaches of contract in a few ways. The four types of contract breaches are:
- Minor breach
- Material breach
- Anticipatory breach
- Actual breach
In business litigation, the type of contract breach will depend on the timing and severity of the breach. In other words, when did the breach occur and how bad was it? Did the breaching party fail to fulfill the entire contract or just a piece of it?
Minor and material breaches
A minor breach of contract is sometimes referred to as a partial breach of contract because it only concerns a small part of the contract that was not fulfilled. On the other hand, a material breach of contract is when the breaching party fails to fulfill the entire contract.
Anticipatory and actual breaches
If you sign a contract with someone, a situation could come up where you learn that they do not intend to fulfill their contractual obligations. This situation would be called an anticipatory breach because the contract breach hasn’t actually occurred yet. When that party goes on to actually neglect their duties, the failure is called an actual breach of contract.
Remedies for contract breaches
Contracts are written so that all parties have legal remedies for contract breaches. If someone does not fulfill their obligations under a contract they signed, other parties in the contract may sue them for damages.