Breach of Contract
A breach of contract occurs when a binding agreement is not honored by at least one party of the contract. One party does not fulfill his or her contractual promise or has indicated to another party of the contract that he or she will not carry out the duty involved in the contract. A breach of contract can also be when one party seems to be unable to fulfill the contract. There are two main breaches of contract: minor and material. A minor breach is a partial breach of the contract and the non-breaching party may only sure for actual damages. A material breach is a failure to perform and permits the other party to make the contract be carried out or sue for damages.
Brief Historical Background
The basic premise of contract law is based on a Latin phrase which when translated means: agreements must be kept. Contract law is classified as part of a general law of obligations. The writ of assumpsit, a tort action that was based on reliance, was the origin of the law of contract. Jurisdiction of contract law is by state although most of contract law is pretty standard across the country. Jurisdictions do vary quite a bit in the degree of freedom of contract law. The United States went through the “Lochner Era” in the early 1900s. During this time period, the US Supreme Court struck down some of the economic regulations on the basis of freedom of contracts as well as the due process clause. While these decisions were overturned, the basis for restricting freedom of contracts came about. History has also brought about the intention to be legally bound – a key concept in the area of breach of contract in contract law.
Precedent Setting Cases
One of the most famous cases in American contract law is that of Jacob & Youngs, Inc versus Kent. This case transpired in 1921 in New York.
It involved a home builder who breached a contract by using a different kind of piping in the house than was conditioned in the contract. When the defendant learned that a different kind of pipe was used in the house, he demanded that the piping be replaced. That demand included tearing down the house to expose the walls and replace the piping, then building it up again – a substantial cost for the plaintiff. The courts decided that the plaintiff was not required to perform this duty however, would not receive full payment for the job.
In the 1901 case of Hurley versus Eddingfield, a court ruled that a physician is allowed to deny health treatment to a patient regardless if there is no other available medical assistance or not, even if it causes the patient to die. In this case, the defendant had refused to enter a contract of employment – he chose not to help the sick patient, even though he was summoned and payment was offered. Subsequently, the patient died. The courts ruled in favor of the defendant as the defendant was not legally obligated to take the patient.
Defenses
There are not really any “defenses” per se for breach of contract. Instead there are exclusions and clauses – ways to get out of a contract. One such excuse is anticipatory repudiation (sometimes also referred to as anticipatory breach). This term describes what happens when one party of a contract declares to another party that she or he is not intending to live up to her or his obligations of a contract. Efficient breach is considered to be a voluntary breach of contract and involves payment of damages by one party that decides that they would incur greater expenses if they carried out the contract. A fundamental breach on the other hand, is a breach that is so fundamental that the distressed party of the contract can terminate performance of the contract as well as that party being entitled to sue for damages.