In law firms where everything runs over contracts, it becomes the basis of the functioning cycle. When one party fails to fulfill any of its contractual obligations, this is said to be a “breach” of the contract. Depending on the circumstances, a breach occurs when a party fails to perform on time, or does not perform following the terms of the agreement, or does not perform at all. To understand the article explains what is a breach of contract in a law firm with examples, types of breaches with remedies available in a law firm in detail, we will start by understanding
What is a contract?
The contract is said to be an agreement, either in writing or verbal form, between two or more parties that creates a legal obligation and has legal validity. The terms and conditions of the contract are enforceable by law. If the contract is not executed, the punishments and fines are mentioned in our laws.
A contract comes into applicability when there is an offer, consideration, and acceptance of the offer between two or more parties. For a contract to exist legally there are six elements required-
Breach of contract in a law firm
A breach of contract occurs when a party fails to perform any part of the contract without any legal justification. It usually happens when one of the parties fails to meet their contractual obligation. This breach could occur due to the failure to perform the contract on time. The contract performance is not in compliance with the written contract or no performance of the contract at all.
Illustration of Breach of contract in a Law firm
For example, Joel contracts with Kim for the purchase of some products for delivery by next Thursday. On Thursday, Kim fails to deliver the products to Joel due to the unavailability of goods, then he is liable for breach of contract.
Types of Breach Contract in a Law Firm
Minor Breach of Contract
A minor breach of contract also known as Partial Breach occurs when the breaching parties do not break the entire contract but do not perform the entire terms of a contract. The non-performance of all the terms of the contract which they committed to when they entered into the contract.
Illustration: If party A commits to deliver 1000L of milk to party B’s factory within 15 days. At the time of delivery, only 800L of milk is given to the factory due to the recent death of cattle. This constitutes in Minor or Partial breach of Contract.
2. Material Breaches
Material Breaches are also known as Major Breaches. As a result of the seriousness of the breach, the agreement’s purpose is in consideration to be entirely in violation. Because the non-breaching party gains no advantage from the agreement, it is permissible for the non-breaching party to ignore it and claim damages.
Illustration: If A signs a contract with a B to supply 10 kg of wheat by a specific date, and they don’t deliver, in that case, B has committed a substantial breach of contract.
3. Anticipatory Breaches
This form of breach, also known as anticipatory repudiation, occurs when one party knows the other will not fulfill the contract’s conditions on time. It gives the non-breaching party the right to sue for breach of contract. In this instance, the non-breaching party has the option of terminating the contract and filing a lawsuit for damages before the breach occurs. Anticipatory breaches arise when one party reveals their intention to not perform their part of the deal ahead of the due date for performance.
4. Actual Breach
An Actual Breach of Contract refers to a breach that has taken place. It indicates that the breaching party has either refused to fulfill its obligations. The breach by them occurs on the due date or have executed their duties inadequately or incompletely.
When there is a breach, the other party has several alternatives for dealing with the situation. Compensatory damages, which pay for direct economic losses caused by the breach, as well as consequential losses, which are indirect losses that exceed the contract’s value but are caused by the breach, are included.
Example: A vendor receives paid for a shipment of stock, but fails to deliver it or delivers the incorrect stock.
Remedies for breach of contract in a Law Firm
1. Monetary Compensation
The most prominent legal remedy for a violation of contract is compensatory damages. Courts direct the infringing party to pay the other party a particular amount of money. The victim party benefits from the money which is in assurance to it when the contract is originally signed.
The amount is usually set by the extent of the victim’s injuries. In the event of a total breach, the litigant is in a position to collect the entire sum equal to the contract’s value if it follows its full terms and circumstances. The petitioner may even be able to recover revenues that are lost as a result of the breach.
2. Specific Performance
Specific performance is a type of contract breach remedy in which the court orders the violating party to perform.
As a remedy for violation of contract, monetary damages are usually in preference with the above-specified performance. Specific performance may be available if monetary damages are insufficient.
Injunctions work similarly as specified performance orders. The difference is that a court orders a party to do a specific task. A court order prohibits a party from performing something known as an injunction. A permanent or temporary injunction is given. To avoid potential damage, temporary injunctions are frequently in issuance while litigation is proceeding.
As a remedy for a breach, rescinding a contract permits a non-breaching party to cancel it. The non-breaching party can simply refuse to fulfill their share of the deal rather than seek monetary damages. Rescission returns the parties to the position they would have been in if they had not engaged in the contract in the first place. The breach must, however, be significant to justify rescission. That is to say, it must be central to the contractual arrangement.