Business Law · Haute Lawyer Network
What Is Breach of Contract?
Last reviewed: June 2026
Breach of contract occurs when one party to a valid contract fails to fulfill their obligations under that contract without a legal excuse for the failure. It is one of the most common claims in civil litigation and the foundation of most business disputes.
Elements of a Breach of Contract Claim
A valid contract — there must be an enforceable agreement: an offer, acceptance, consideration (something of value exchanged), and mutual assent. Without a valid contract, there can be no breach.
Performance by the plaintiff — the party claiming breach must have performed their own obligations under the contract, or have a valid excuse for non-performance.
Breach by the defendant — the defendant failed to perform a material obligation under the contract. A minor or immaterial deviation is not necessarily a breach.
Damages — the plaintiff suffered measurable harm as a result of the breach.
Types of Breach
Material breach — a significant failure that goes to the heart of the contract and excuses the non-breaching party from further performance. If a contractor fails to complete construction by the contract deadline causing significant loss, that may be a material breach.
Minor breach — a partial or technical failure that does not fundamentally undermine the contract's purpose. The non-breaching party can recover damages but must still perform their own obligations.
Anticipatory breach — one party repudiates the contract before performance is due — communicating clearly that they will not perform. The non-breaching party can treat this as an immediate breach and pursue remedies without waiting for the performance date.
Remedies for Breach of Contract
Compensatory damages — money to put the non-breaching party in the position they would have been in had the contract been performed. This includes expectation damages (the benefit of the bargain) and consequential damages (foreseeable losses caused by the breach).
Specific performance — a court order requiring the breaching party to perform the contract. Available when monetary damages are inadequate — most commonly in real estate contracts where each property is unique.
Rescission — cancellation of the contract and restoration of the parties to their pre-contract positions.
Liquidated damages — damages specified in the contract itself for particular breaches. Enforceable if they represent a reasonable estimate of actual damages rather than a penalty.
Frequently Asked Questions
What is the statute of limitations for breach of contract?
Most states have a 4-6 year statute of limitations for written contracts and a 2-4 year period for oral contracts. The clock generally starts running when the breach occurs. Check your state's specific limitations period.
Do I need an attorney to sue for breach of contract?
Not for small claims court, which handles contract disputes up to a dollar limit — typically $5,000-$25,000 depending on the state. For larger claims, an attorney is strongly recommended.
What is the difference between breach of contract and fraud?
Breach of contract is a failure to perform a contractual obligation. Fraud involves intentional misrepresentation made to induce someone to enter a contract. Fraud is a tort as well as potentially a crime. Both can arise from the same facts but require proving different elements.
Can I recover attorney fees in a breach of contract case?
In most U.S. jurisdictions, each party pays their own attorney fees (the American Rule) unless the contract specifically provides for fee-shifting or a statute provides for fees. Many commercial contracts include fee-shifting provisions.
What is the duty to mitigate in a breach of contract case?
The non-breaching party has a legal duty to take reasonable steps to reduce the losses caused by the breach. If you fail to mitigate — for example, by sitting on a breach without taking steps to find a replacement — your recoverable damages may be reduced.
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