Breach of Contract: Types, Remedies, and What to Do When It Happens
When the other party fails to perform, your remedies depend on how the contract was drafted. Here’s what you need to know before — and after — a breach occurs.
Material vs minor breach
A material breach goes to the heart of the agreement — the other party fails to deliver the core thing they promised. This gives you the right to terminate the contract and seek damages.
A minor breach is a partial or technical failure that doesn’t destroy the contract’s value. You can seek damages but cannot terminate.
The distinction matters because your available remedies are completely different.
Key takeaway
Material breach = you can terminate + seek damages. Minor breach = you can seek damages but must continue performing.
The four main remedies
Compensatory damages: money to put you in the position you would have been in had the breach not occurred.
Specific performance: a court order requiring the breaching party to perform. Rare, typically reserved for unique goods or real estate.
Rescission: unwinding the contract entirely, returning both parties to their pre-contract positions.
Liquidated damages: pre-agreed amounts written into the contract for specific breaches. Common for late delivery penalties.
Cure periods: your first line of defense
A cure period gives the breaching party a chance to fix the problem before termination. The standard is 30 days for most commercial contracts.
Why this matters: without a cure period, any breach — even an unintentional one — could result in immediate termination. With one, you have time to correct mistakes before the relationship is destroyed.
Pro tip: Always include a cure period in termination clauses. 30 days is market standard. Without one, even accidental breaches could end the contract.
How to protect yourself before a breach happens
The best time to address breach remedies is before signing. Ensure your contract includes: clear definition of material breach, reasonable cure periods (30 days), dispute escalation (management discussion before litigation), limitation of liability to cap your exposure, and an attorneys’ fees provision (so the loser pays).
Check your contract’s remedies clauses
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