Legal Definitions - breach of contract

A breach of contract occurs when one party to a legally binding agreement fails to fulfill their promised obligations as outlined in the contract. This failure can take several forms: not performing a promised action, actively refusing to perform (known as repudiation), or hindering the other party's ability to perform their part of the agreement. When a breach happens, it typically gives the non-breaching party legal grounds to seek a remedy, often financial compensation, to put them in the position they would have been in had the contract been honored.

Here are some examples illustrating a breach of contract:

• Example 1: Service Delivery Failure
  A small business hires a marketing agency to run a three-month digital advertising campaign, with a contract specifying a minimum number of ad impressions and weekly performance reports. After the first month, the agency fails to provide any reports and the ad impressions are significantly below the agreed-upon minimum, despite the business having made the initial payment.

  How it illustrates the term: This is a breach of contract because the marketing agency failed to perform its promised obligations (providing reports and achieving minimum ad impressions) as clearly outlined in the agreement.

• Example 2: Goods Not Meeting Specifications
  A clothing retailer places a large order with a manufacturer for 1,000 custom-designed t-shirts, specifying a particular fabric blend and color swatch in the contract. When the shipment arrives, the retailer discovers that 700 of the t-shirts are made from a different, lower-quality fabric and are a noticeably different shade of color than agreed.

  How it illustrates the term: The manufacturer committed a breach by delivering goods that did not conform to the agreed-upon specifications regarding fabric and color, thereby failing to fulfill the terms of the contract.

• Example 3: Refusal to Perform (Repudiation)
  A homeowner contracts with a construction company to build an extension on their house, with work scheduled to begin on April 1st. Two weeks before the start date, the construction company sends a letter stating they have taken on a larger project and will not be able to perform the work on the homeowner's extension at all.

  How it illustrates the term: This is a breach by repudiation. The construction company explicitly communicated its intent not to perform its contractual obligations before the performance was even due, making it clear they would not honor the agreement.