18:48
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LSDefine
Simple English definitions for legal terms
efficient breach
Read a random definition: notarial record
A quick definition of efficient breach:
An efficient breach is when someone breaks a contract on purpose because it would cost them less money to pay for the damage than to keep their promise. This is different from accidentally breaking a contract. When this happens, the person who broke the contract usually only has to pay for the actual damage they caused, not extra punishment.
A more thorough explanation:
An efficient breach is when someone intentionally breaks a contract because it would cost them less money to pay for the damages than to actually follow through with the agreement. This is different from accidentally breaking a contract.
For example, let's say a company agrees to sell a product to another company for $10,000. However, the company realizes that they can sell the product to someone else for $15,000. They intentionally break the contract with the first company and pay the damages of $10,000 because it is still cheaper than selling the product for $10,000.
The concept of efficient breach is widely accepted in the legal system, which means that when someone intentionally breaks a contract, they are only required to pay for the actual damages caused by the breach, not any additional punishment.