Contract Negotiation:

Definition

A contract is “breached” when one involved party fails to fulfill an obligation or part of an obligation they agreed to under the terms stated in the contract.  In simplified terms, it simply means that one party didn’t hold up their end of the bargain.  A breach of contract is typically categorized as “material” or “immaterial”, depending on the specifics of the contract.

An immaterial, or minor breach occurs when the non-breaching party is only entitled to collect the actual amount of their damages.  Suppose someone was hired to replace a window, and told to use glass window A.  The contractor used glass window B, which functioned identically to window A, with the same properties, only window B came from a different distributor.  The contractor is in breach of the literal terms of his contract, but since this breach did not inflict any damages, the homeowner cannot receive anything.

A material breach of contract occurs when a failure to perform allows for the wronged party to either compel performance, or collect damages the breach caused.  If the contractor mentioned in the example above had used a lower quality of glass, which shatters during the first rainstorm, the homeowner can recover the cost of correcting the breach (having the window removed and replaced).

A fundamental breach is a failure to uphold such a basic agreement that it allows the non-breaching party to terminate performance of the contract, and allows them to sue for damages.

An anticipatory breach is a clearly-stated indication that the party will not perform when performance is due, or a situation in which future non-performance is unavoidable.  This type of breach allows the non-breaching party the option to treat such a breach as immediate, without having to wait for the anticipated breach to occur.

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