Breach of Contract
The failure of one party to fulfill their obligations under a legally binding contract — the foundation of most civil commercial disputes.
A breach of contract occurs when a party to a valid contract fails to perform their contractual obligations without a legal excuse. To establish a breach of contract claim, the plaintiff must prove four elements: (1) a valid contract existed (offer, acceptance, consideration, capacity, legality); (2) the plaintiff performed their obligations or had a valid excuse for non-performance; (3) the defendant failed to perform; and (4) the plaintiff suffered damages as a result.
Breaches exist on a spectrum: a material breach is significant enough to excuse the non-breaching party from their remaining obligations and sue for the full benefit of the bargain; a minor (partial) breach only entitles the non-breaching party to damages for the specific deficiency, not rescission of the entire contract. Whether a breach is material depends on the contract's purpose, the extent of non-performance, and whether the non-breaching party received substantially what they bargained for.
Remedies for breach of contract include: expectation damages (the benefit of the bargain — what you would have received if the contract had been performed), reliance damages (out-of-pocket expenses incurred in reliance on the contract), restitution (return of any benefit conferred on the breaching party), and specific performance (a court order to perform — available primarily for unique goods or real estate).
Real-World Example
The contractor received 50% upfront for a kitchen remodel but abandoned the project halfway through; the homeowner sued for breach of contract and recovered the $28,000 paid plus $12,000 to complete the work at the higher cost of hiring a replacement contractor.