Breach of Contract explained

Contracts are intended to protect the interests of all parties involved in a business transaction, but breach of contract cases are surprisingly common. If you are a contractor who has not been paid or a business owner who has not received the agreed-upon products or services, you are protected under the terms of Missouri contract law and the Uniform Commercial Code (UCC). 

Enforceability of the Contract

The first step in pursuing any breach of contract claim is to make sure the contract is legally valid. Both oral and written contracts can be legally enforceable, but some types of contracts must be in writing to be considered valid. For example, contracts involving the sale of land, a promise to pay debts on someone else’s behalf, or the sale of goods valued at more than $500 must be in writing.

Some examples of contracts that Foster Wallace commonly handles include:

  • Real estate agreements
  • Construction contracts
  • Commercial leases
  • Insurance agreements
  • Partnership agreements
  • Service agreements
  • Non-compete agreements
  • Purchase agreements
  • Warranties and guarantees
  • Promissory notes

Types of Breaches

In most cases, there are two forms of a breach of contact: actual breaches and anticipatory breaches.

An actual breach means that one party has refused to fulfill their side of the contract or performs the contracted duties incorrectly. For example, a contract for home improvement services could be breached if the contractor used substandard materials or performed work that somehow violated existing building codes.

Anticipatory breaches occur when one party announces in advance of the due date that they do not intend to fulfill their side of the agreement. Anticipatory breaches for service-related contracts can occur for several reasons, such as illness, staffing problems, or scheduling conflicts. Failing to provide payment for services or products delivered is also a type of anticipatory breach.

Extent of the Breach

The extent of the breach of contract is another important factor to consider when evaluating your legal options. Breaches are generally classified as either material or minor.

Material breaches, sometimes called total breaches, occur when one party receives something that is substantially unlike what was in the contract, such as a website for a new business that fails to provide the pertinent details related to the business's services or products.

Minor breaches, also known as partial breaches, occur when one part of the contract is not performed according to the terms of the contract. For example, a web designer who misses the project deadline or provides a website that does not include all of the previously agreed-upon pages is likely to have committed a minor breach of contract.

Available Types of Damages

Compensatory damages are an attempt to reimburse you for losses caused by the breach of contract. Compensatory damages can be either expectation damages or consequential damages. Expectation damages cover what you intended to get out of the contract, such as an employee performance bonus or overtime wages. Consequential damages cover indirect damages caused by the breach of contract, such as a loss of profit for your restaurant when an oven you ordered was not delivered on time.

Specific performance can sometimes be an alternative to compensatory damages. This means that the breaching party is legally required to perform their part of the contract. Specific performance is most often requested in real estate transactions because every parcel of land is unique, and compensatory damages may not fully cover the scope of the breach.

Punitive damages are not common in breach of contract cases but can be awarded to punish the breaching party when they have been intentionally negligent or engaged in behavior that is particularly egregious.

How Foster Wallace Can Help

Breach of contract cases can be overwhelming for a business owner due to the number of variables to consider. Retaining the services of an attorney experienced in handling these types of claims is the best way to protect your company’s bottom line.

At Foster Wallace, our dedicated legal team handles breach of contract and other types of commercial or business litigation claims for clients throughout Missouri. Contact us today to schedule a consultation to discuss your legal options.