{"id":12103,"date":"2018-11-01T23:33:24","date_gmt":"2018-11-01T23:33:24","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/?post_type=chapter&#038;p=12103"},"modified":"2024-05-07T16:56:16","modified_gmt":"2024-05-07T16:56:16","slug":"breaches-of-contracts","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/chapter\/breaches-of-contracts\/","title":{"raw":"Breaches of Contracts","rendered":"Breaches of Contracts"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Define \"breach of contract\"<\/li>\r\n \t<li>Explain the legal remedies for breach of contract<\/li>\r\n<\/ul>\r\n<\/div>\r\nThe University of New Mexico\u2019s Judicial Education Center defines breach of contract as \u201ca failure, without legal excuse, to perform any promise that forms all or part of the contract. This includes failure to perform in a manner that meets the standards of the industry or the requirements of any express warranty or implied warranty, including the implied warranty of merchantability.\u201d[footnote]\"Breach of Contract.\" Judicial Education Center. Accessed June 12, 2019. <a href=\"http:\/\/jec.unm.edu\/education\/online-training\/contract-law-tutorial\/breach-of-contract\" target=\"_blank\" rel=\"noopener\">http:\/\/jec.unm.edu\/education\/online-training\/contract-law-tutorial\/breach-of-contract<\/a>.[\/footnote]\r\n\r\nWhen a breach is material, the non-breaching party is released from performing his or her obligations under the contract. That is, the party is \u201cdischarged\u201d and has the right to all remedies for breach of contract. If the breach is not material, the non-breaching party is held to the contract but may sue for damages resulting from the breach. For example, a minor delay in receiving goods or services when time is not \u201cof the essence\u201d is an immaterial breach. The buyer is required to pay for the goods or services as contracted and may sue to recover any damages caused by the delay.\r\n<div class=\"textbox tryit\">\r\n<h3>PRactice Question<\/h3>\r\nhttps:\/\/assess.lumenlearning.com\/practice\/6f047256-2239-444d-a28e-fa8669df0966\r\n\r\n<\/div>\r\nAs discussed above, a breach of contract occurs when a party (or parties) to a contract fails to perform their duties without a valid excuse. The method a court uses to compensate an injured party is referred to as a \u201cremedy.\u201d Damages for breach of contract are based on three interests: expectation, reliance, and restitution.\r\n\r\nExpectation interest\u2014described as \u201cbenefit of the bargain\u201d\u2014is designed to put the plaintiff in the position he or she would have been in had the contract been fully executed.[footnote]\"Damages for Breach of Contract.\" NYU Law. Accessed June 12, 2019. <a href=\"https:\/\/www.law.nyu.edu\/sites\/default\/files\/ECM_PRO_063763.pdf\" target=\"_blank\" rel=\"noopener\">https:\/\/www.law.nyu.edu\/sites\/default\/files\/ECM_PRO_063763.pdf<\/a>.[\/footnote] This is the most common remedy for a breach of contract. In this scenario, damages are calculated to take into account all reasonably expected gains, expenses, or losses. Monetary awards based on expectation interest may include direct damages, consequential damages, and\/or incidental damages. Direct damages are the direct costs incurred due to the breach of contract. In addition to direct damages, a plaintiff may seek consequential or \u201cspecial\u201d damages.\r\n\r\nConsequential damages are awarded only if the breaching party should have foreseen the consequences when the contract was negotiated. Incidental damages are the costs an injured party incurs responding to the breach. The caveat: expectation damages must be able to be quantified with reasonable certainty. If that\u2019s not the case, an injured party may want to pursue damages based on reliance interest instead.\r\n\r\nReliance interest is designed to put the plaintiff in the position he or she would have been in if the contract had never been made. In this case, the remedy is based on the time and money the injured party invested in performance of the contract.\r\n\r\nIf an injured party cannot prove expectation damages or reliance damages, the final option is restitution. Restitution may also arise in a situation where there is a discharge of duties. To quote from the contract language: \u201cA party whose duty of performance does not arise or is discharged as a result of nonoccurrence of a condition is entitled to restitution for any benefit that he has conferred on the other party by way of part performance or reliance.\u201d\r\n\r\nWhen monetary damages are insufficient to compensate the plaintiff for the breach, a court can order specific performance, which compels one party to perform, as nearly as practicable, his or her duties specified in the contract. Specific performance is generally used in cases where the object transferred is considered to be rare or unique\u2014for example, art or land.\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\nhttps:\/\/assess.lumenlearning.com\/practice\/aa197e6f-bc19-45c1-8cda-2d8fef854b2a\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Define &#8220;breach of contract&#8221;<\/li>\n<li>Explain the legal remedies for breach of contract<\/li>\n<\/ul>\n<\/div>\n<p>The University of New Mexico\u2019s Judicial Education Center defines breach of contract as \u201ca failure, without legal excuse, to perform any promise that forms all or part of the contract. This includes failure to perform in a manner that meets the standards of the industry or the requirements of any express warranty or implied warranty, including the implied warranty of merchantability.\u201d<a class=\"footnote\" title=\"&quot;Breach of Contract.&quot; Judicial Education Center. Accessed June 12, 2019. http:\/\/jec.unm.edu\/education\/online-training\/contract-law-tutorial\/breach-of-contract.\" id=\"return-footnote-12103-1\" href=\"#footnote-12103-1\" aria-label=\"Footnote 1\"><sup class=\"footnote\">[1]<\/sup><\/a><\/p>\n<p>When a breach is material, the non-breaching party is released from performing his or her obligations under the contract. That is, the party is \u201cdischarged\u201d and has the right to all remedies for breach of contract. If the breach is not material, the non-breaching party is held to the contract but may sue for damages resulting from the breach. For example, a minor delay in receiving goods or services when time is not \u201cof the essence\u201d is an immaterial breach. The buyer is required to pay for the goods or services as contracted and may sue to recover any damages caused by the delay.<\/p>\n<div class=\"textbox tryit\">\n<h3>PRactice Question<\/h3>\n<p>\t<iframe id=\"assessment_practice_6f047256-2239-444d-a28e-fa8669df0966\" class=\"resizable\" src=\"https:\/\/assess.lumenlearning.com\/practice\/6f047256-2239-444d-a28e-fa8669df0966?iframe_resize_id=assessment_practice_id_6f047256-2239-444d-a28e-fa8669df0966\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:300px;\"><br \/>\n\t<\/iframe><\/p>\n<\/div>\n<p>As discussed above, a breach of contract occurs when a party (or parties) to a contract fails to perform their duties without a valid excuse. The method a court uses to compensate an injured party is referred to as a \u201cremedy.\u201d Damages for breach of contract are based on three interests: expectation, reliance, and restitution.<\/p>\n<p>Expectation interest\u2014described as \u201cbenefit of the bargain\u201d\u2014is designed to put the plaintiff in the position he or she would have been in had the contract been fully executed.<a class=\"footnote\" title=\"&quot;Damages for Breach of Contract.&quot; NYU Law. Accessed June 12, 2019. https:\/\/www.law.nyu.edu\/sites\/default\/files\/ECM_PRO_063763.pdf.\" id=\"return-footnote-12103-2\" href=\"#footnote-12103-2\" aria-label=\"Footnote 2\"><sup class=\"footnote\">[2]<\/sup><\/a> This is the most common remedy for a breach of contract. In this scenario, damages are calculated to take into account all reasonably expected gains, expenses, or losses. Monetary awards based on expectation interest may include direct damages, consequential damages, and\/or incidental damages. Direct damages are the direct costs incurred due to the breach of contract. In addition to direct damages, a plaintiff may seek consequential or \u201cspecial\u201d damages.<\/p>\n<p>Consequential damages are awarded only if the breaching party should have foreseen the consequences when the contract was negotiated. Incidental damages are the costs an injured party incurs responding to the breach. The caveat: expectation damages must be able to be quantified with reasonable certainty. If that\u2019s not the case, an injured party may want to pursue damages based on reliance interest instead.<\/p>\n<p>Reliance interest is designed to put the plaintiff in the position he or she would have been in if the contract had never been made. In this case, the remedy is based on the time and money the injured party invested in performance of the contract.<\/p>\n<p>If an injured party cannot prove expectation damages or reliance damages, the final option is restitution. Restitution may also arise in a situation where there is a discharge of duties. To quote from the contract language: \u201cA party whose duty of performance does not arise or is discharged as a result of nonoccurrence of a condition is entitled to restitution for any benefit that he has conferred on the other party by way of part performance or reliance.\u201d<\/p>\n<p>When monetary damages are insufficient to compensate the plaintiff for the breach, a court can order specific performance, which compels one party to perform, as nearly as practicable, his or her duties specified in the contract. Specific performance is generally used in cases where the object transferred is considered to be rare or unique\u2014for example, art or land.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p>\t<iframe id=\"assessment_practice_aa197e6f-bc19-45c1-8cda-2d8fef854b2a\" class=\"resizable\" src=\"https:\/\/assess.lumenlearning.com\/practice\/aa197e6f-bc19-45c1-8cda-2d8fef854b2a?iframe_resize_id=assessment_practice_id_aa197e6f-bc19-45c1-8cda-2d8fef854b2a\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:300px;\"><br \/>\n\t<\/iframe>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-12103\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Breaches of Contracts. <strong>Authored by<\/strong>: Nina Burokas. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section><hr class=\"before-footnotes clear\" \/><div class=\"footnotes\"><ol><li id=\"footnote-12103-1\">\"Breach of Contract.\" Judicial Education Center. Accessed June 12, 2019. <a href=\"http:\/\/jec.unm.edu\/education\/online-training\/contract-law-tutorial\/breach-of-contract\" target=\"_blank\" rel=\"noopener\">http:\/\/jec.unm.edu\/education\/online-training\/contract-law-tutorial\/breach-of-contract<\/a>. <a href=\"#return-footnote-12103-1\" class=\"return-footnote\" aria-label=\"Return to footnote 1\">&crarr;<\/a><\/li><li id=\"footnote-12103-2\">\"Damages for Breach of Contract.\" NYU Law. Accessed June 12, 2019. <a href=\"https:\/\/www.law.nyu.edu\/sites\/default\/files\/ECM_PRO_063763.pdf\" target=\"_blank\" rel=\"noopener\">https:\/\/www.law.nyu.edu\/sites\/default\/files\/ECM_PRO_063763.pdf<\/a>. <a href=\"#return-footnote-12103-2\" class=\"return-footnote\" aria-label=\"Return to footnote 2\">&crarr;<\/a><\/li><\/ol><\/div>","protected":false},"author":17,"menu_order":18,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Breaches of Contracts\",\"author\":\"Nina Burokas\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"1ead3e74-3f87-4990-adf5-29d31a051943, 7767ac40-51e2-4a84-8fd3-c21631a028bb, 0208f10f-8f44-479f-876e-56859820e94e","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-12103","chapter","type-chapter","status-publish","hentry"],"part":84,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters\/12103","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/wp\/v2\/users\/17"}],"version-history":[{"count":9,"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters\/12103\/revisions"}],"predecessor-version":[{"id":15534,"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters\/12103\/revisions\/15534"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/parts\/84"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters\/12103\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/wp\/v2\/media?parent=12103"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/chapter-type?post=12103"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/wp\/v2\/contributor?post=12103"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/wp\/v2\/license?post=12103"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}