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Breach of contract: Understanding the basics

On Behalf of | May 27, 2020 | Business Law

All businesses rely on contracts. For some enterprises, these agreements may be irregular one-offs with vendors, executed as needed. Other companies may operate within a large web of contracts, requiring predictability and punctuality from all parties to ensure success.

Whatever the case, a breach of contract can put your business in a bind. But what actually constitutes breach of contract under the law? It’s a question with a more nuanced answer than many realize.

Elements of breach of contract

At its most basic, a breach of contract is a broken promise. It is one party’s failure to uphold their end of the deal according to the terms of the contract. A breach can be material (so significant the deal is fundamentally broken and potentially no longer valid) or non-material (of note, but not enough to invalidate the contract itself).

In order for a breach of contract case to be legally actionable, four elements must exist:

  • A valid contract was established between the parties
  • The plaintiff tendered performance – meaning they upheld, or attempted to uphold, their end of the deal
  • The defendant did not uphold their obligations
  • The plaintiff sustained damages because of that breach

Damages for breach of contract

When one party sues another for breach of contract, the law outlines specific damages that may be awarded. As explained by Texas Law Help, the injured party should end up in the same position they would have been if the contract had not been breached. In these types of cases, damages are strictly about compensation. They are not punitive.

Contract litigation is quite complex, requiring a deep well of knowledge and experience from which to draw. But as a business that entered into an agreement, you have rights. Enforcing these rights can help ensure you come out on the other side no worse for the wear.