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Simple English definitions for legal terms
breach of contract
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A quick definition of breach of contract:
A breach of contract happens when someone doesn't do what they promised to do in a contract. This can cause problems and disagreements between the people involved. The goal of contract law is to make things fair for the person who was harmed by the breach. Usually, this means giving them money to make up for what they lost. Sometimes, they can also get money for things they did because they thought the contract would be followed. This is called reliance damages. If the harm is really bad, the court might make the person who broke the contract do what they promised instead of just giving money. People can also agree in advance how much money will be paid if there's a breach. This can make things easier, but the court might not allow it if it's not fair.
A more thorough explanation:
A breach of contract occurs when one party fails to fulfill their obligations as outlined in a contract. This can happen for various reasons, such as a failure to pay, deliver goods, or perform services as agreed upon. When a breach of contract occurs, the harmed party has legal options to seek compensation for their losses.
The most common remedy for a breach of contract is monetary damages. This means that the harmed party can seek compensation for the financial losses they suffered as a result of the breach. For example, if a homeowner hires a contractor to paint their house for $50,000 but only pays $10,000 after the work is done, the court may award the contractor $40,000 in damages.
However, in some cases, monetary damages may not be enough to fully compensate the harmed party. In these situations, the court may order specific performance, which requires the breaching party to fulfill their obligations as outlined in the contract. This remedy is typically only used for unique assets, such as real estate.
Another option for seeking compensation is through reliance damages. This allows the harmed party to recover expenses they incurred in reliance on the contract. For example, if a pool construction company breaches their contract, the buyer of the pool may be able to recover the cost of lifeguard equipment they purchased in anticipation of the pool's completion.
It's important to note that the harmed party has a duty to mitigate their losses. This means that they must take reasonable steps to minimize their damages. For example, if a contractor breaches their contract, the homeowner must attempt to find another contractor to complete the work before seeking damages.
Parties can also include liquidated damages provisions in their contracts. These provisions establish in advance how much money the breaching party must pay if they fail to fulfill their obligations. However, courts may strike down these provisions if they appear to be punitive or unconscionable.
In summary, a breach of contract occurs when one party fails to fulfill their obligations as outlined in a contract. The harmed party has legal options to seek compensation, including monetary damages, specific performance, and reliance damages. It's important to mitigate damages and parties can include liquidated damages provisions in their contracts.