What is a breach of contract?

What is a breach of contract?

What is a breach of contract?

There are two forms of breach of contract: failure to perform; and anticipatory breach. A failure to perform occurs if a promisor, without lawful excuse, fails to discharge a contractual obligation. And anticipatory breach arises where, prior to the time appointed for performance by the promisor, the promisee justifiably terminates the performance of the contract. The promise city's termination will be justified if the words or conduct of the promisor, or the promisor's actual position, give rise to repudiation of obligation or indicate that the promisor was wholly and finally disabled from performing the contract.

The basic distinction between the two forms of breach is the time of occurrence: a failure to perform can only occur after the time for performance has expired; an anticipatory breach precedes a time of performance. A breach may, however, be a kind of hybrid, for example, where thepromisor not only fails to perform but also repudiates future contractual obligations. There is one other distinction between the two forms of breach: a failure to perform need not give rise to a right to terminate where as an anticipatory breach arises, if at all, on termination of the performance of the contract. If there is no termination, but the promisor continues to repudiate, a breach will arise once the promisor fails to perform, but this bridge is a failure to perform rather than an anticpatory breach.

In some situations performance which is not in good faith will constitute a breach of contract. But it is not meaningful to speak of bad faith performance unless there is a duty to act in good faith. Such a duty may arise from a number of reasons. First, there are some contracts of a fiduciary nature which necessarily create a relationship under which one party is expected to act in good faith towards the other. Thus, an agency contract requires the agent to exercise good faith when performing the contract. Therefore, performance in a way which indicates bad faith, such as dealing with third party on behalf of the principle but with the object of imposing onerous and unprofitable obligations on the principle, will amount to a breach. Alternatively, the relationship may be such that both parties are subject to good faith obligations, as under a partnership contract.

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