In this article, we will answer the question “what is a breach of contract?” and explain when a breach of contract occurs according to Illinois contract law. We will explain when a contract is valid in Illinois and answer the question “can I be held liable for breach of an oral contract?” Finally, we will explain the definition of an “anticipatory breach of contract” as well as a “material breach of contract.”
Breaches of contract occur when one party does not perform according to the manner laid out in the contract, the time agreed upon in the contract, in a way that is only partially what was agreed upon, or completely different from what was agreed.
Below are some examples of contract breaches:
Although a breach of contract occurs when one party fails to perform under the agreement, all of the following elements must be true for the other party to be able to maintain a breach of contract claim in court:
Bear in mind that even if all of these elements are true, the injured party will not be able to recover if the breaching party has a valid defense to breach of contract claims (For more, check out our article on the topic: Illinois Defenses to Breach of Contract Explained).
As a threshold issue, one won’t be held accountable for breaching a contract that was not valid in the first place. A contract requires the following elements in order to be valid:
More on this: What is Needed For a Contract to Be Legally Binding?
You may recall from our previous article, “What is Needed For a Contract to Be Legally Binding?”, that a contract can be either written or oral. An oral contract is acceptable in most cases except those involving property, certain debts, money of a certain amount or contracts that will be taking place for longer than one year. Oral contracts can be breached in the same manner as written contracts, although breaches of an oral contract tend to be more difficult to prove than breaches of a written contract.
An actual breach of contract occurs when one party does not deliver on their side of the bargain once the due date for performance arrives. An anticipatory breach is an action that demonstrates that one party is planning on failing in the future to uphold their end of the contract and will not complete their contractual obligations. An anticipatory breach of contract by one party the the contract relieves the other party of the duty to perform and may lead to liability in the same way as an actual breach, depending on the circumstances. This is also known as a repudiatory breach of contract.
A material breach of contract is a breach that substantially defeats the benefit that the other party expected to receive from the contract. A material breach by one party will relieve the other party of the obligation to perform their end of the deal. A minor breach of contract occurs when some part of the contract was not fulfilled, such as the due date for delivery, but the other party still received a substantial benefit. In these cases, the other party is still required to perform their end of the contract, but the party that breached may be required to pay damages in order to put the non-breaching party in as good of a position as they would have been in had the minor breach not occurred.
When hearing a breach of contract case, courts will consider to what extent one party missed out on the benefits that were expected, the extent to which that party can be compensated, what type of breach occurred and whether there was a legal reason for the breach. A court may also determine whether it is likely that the contract will be fulfilled if the party is given another chance to act accordingly.