Whether you are an individual or a business entering a contract, you should be aware of the conditions under which the contract could be breached. Based on the specifics of the contract, you or the other party could unintentionally commit a breach which could lead to legal action. More often than not, breaches are caused by a poorly drafted commercial contract. In some cases, however, the breach is committed with a view to subvert the contract itself. In this blog, Melbourne Law Studio outlines three common types of breaches of contract: material, minor and repudiation.
The most serious type of breach is called a material breach. Also known as a fundamental breach, it involves a failure to fulfil a key element of the contract.
While contracts often outline exactly what counts as a material breach and what does not, if there has been a breach, the aggrieved party has the right to claim remedies.
If, for example, you hire a painter to paint your house and the painter never arrives to begin the job, it would be considered a material breach of contract.
Not all breaches of a commercial contract are considered fundamental or material in nature. If a non-essential obligation has not been met, it would be considered a minor breach. The contract remains valid, and the aggrieved party has a right to recover damages. A minor breach does not give either party the right to terminate the contract.
If you have agreed that the painter will paint your house with a specific shade of blue paint from a specific brand, and the painter arrives with the correct shade of blue but from a different brand, this would be considered a minor breach of contract.
A repudiation of a contract occurs when one of the involved parties indicates that they will not honour their side of the contract. This may happen because they are unwilling or unable to do so. The party repudiating the contract has to notify the other party and demonstrate their intention through direct communication.
If the painter mentioned earlier contacts you to let you know that they will not be arriving to complete the job even after an agreement was made, it is considered a repudiation of the contract.
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