breach of contract

A failure by a party to a contract to perform obligations under that contract or an indication of an intention not to do so. An indication that a contract will be breached in the future is called repudiation or an anticipatory breach; it may be either expressed in words or implied from conduct. Such an implication arises when the only reasonable inference from a person's acts is an intention not to fulfil his or her part of the bargain. For example, an anticipatory breach occurs if a person contracts to sell a car to A but sells and delivers it to B before the delivery date agreed with A. The repudiation of a contract entitles the injured party to treat the contract as discharged and to sue immediately for damages for the loss sustained. The same procedure only applies to an actual breach if it constitutes a fundamental breach, i.e. a breach of a major term of the contract. In either an anticipatory or an actual breach, the injured party may, however, decide to affirm the contract instead. When an actual breach relates only to a minor term of the contract (a warranty) the injured party may sue for damages but has no right to treat the contract as discharged. The process of treating a contract as discharged by reason of repudiation or actual breach is sometimes referred to as rescission. Other remedies available under certain circumstances for breach of contract are an injunction and specific performance.