by Anika Mardiah Chowdhury
A contract is an agreement made between two or more persons and a contractual agreement is a legally binding agreement between parties. The contractual agreement contains terms and conditions between the parties for example either to do or to refrain from somethings. A contractual agreement is legally enforceable if contains certain specific requirements for example- offer and acceptance, mutual consent, consideration, competence, and legal Purpose. The Contract Act 1872 chapter III of section 10 defines contract agreement as all agreements are contracts if they are made by the free consent of parties competent to contract for a lawful consideration and with a lawful object and are not hereby expressly declared to be void. Also states that any contractual agreement is required to be made in writing or in the presence of witnesses or any law relating to the registration of documents.
The purpose of a contractual agreement is to serve as a record of the agreement between the two parties as contractual agreements protect both parties through ensuring that they both follow terms and conditions. The contractual agreement includes-
Firstly, formalities – it is a basic rule that contract must be in writing, though an oral contract can be enforceable in some cases; but in the case of oral contract, there is less chance of accurate interpretations. Having a written contract also proves that the contract exists.
Secondly, signatures – a contract should be signed by the parties involved in the contract. The signer of the contract needs to be legally competent and cannot be under the influence of any substances, mentally ill, or signature by a minor.
If any party to a contract fails or refuses to meet his obligations under the contract is known as the breach of contract. A breach of contract can happen in both a written and an oral contract. There are four main types of contract breaches. They are mentioning below-
Minor Breach: A minor breach is sometimes called an immaterial breach or partial breach also referred to as unbiased infringement. It is a situation where the important aspects of a contract were received but some small part of the obligation was missed or when a party fails to perform a part of the contract a minor breach occurs but this minor breach does not infringe the entire contract agreement. A minor breach will be considered if the infringement is non-essential that remaining contractual obligations may otherwise be fulfilled by the parties involved.
It is to be mentioned that legal action can be taken in case of a minor breach but it is hard to show the damages as a result of a minor breach.
Material Breach: A material breach in a contract consider a significant infringement, also sometimes it is called the severe type of breach. Typically, his type of breach involves a key element of a contract not being either undertaken or provided as agreed.
It is difficult to find out what will define or what does or does not constitute a material breach of contract. For example, if someone buys a computer online but he receives the monitor only. Hence this can be called a material breach of contract and the purchaser is entitled to take legal action.
Another example can be given as if anyone enters into a contract with a marketing company to build a fully functional website by a certain date but they fail to deliver. Then that would be a material breach of contract agreement and the contract is fully defeated. Often, this material breach is considered a complete violation.
Fundamental breach: A fundamental breach is sometimes the same as a material breach and in that case, the non-breaching party is entitled to terminate the contract and claim damages in the event of a breach. It is often deemed that a fundamental breach is more egregious than a material breach.
The fundamental breach is also the most common way in a contract to breach. For example, a vendor is paid for a shipment of stock but they either do not deliver them or deliver the wrong stock.
Another example can be given where a seller refuses to deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery for breach of contract to deliver specific or ascertained goods held in the case of Ibrahim (Md.) Vs. Government of the Peoples Republic of Bangladesh & others, 2012, 41 CLC (HCD.)
Anticipatory Breach: An anticipatory breach happens when a party informs to other party either orally or in writing that they will not be able to fulfill the contract terms or obligations or by the agreed time. As a result, the other party of the contract can claim or seek an immediate settlement for the violation. An anticipatory breach is sometimes also called anticipatory repudiation.
This breach is probably the least common of the four-contract breached but it is still entitled to legal remedies. For example, a contractor makes it impossible to meet a deadline and they stop work on one project and put all their resources into a new project with another developer. The first developer has the right to cause to take legal action against the architects.
In the case of M/S. Nur Mohammad and Company Limited vs. Bangladesh 61 DLR (AD) (2009) 77 stated that it is settled law that where a party to a contract commits an anticipatory breach of the contract, the other party may choose to keep the contract alive till the time of performance and claim specific performance but in that event, he cannot claim specific performance unless he shows his readiness and willingness to perform the contract.
Section 73 of the Contract Act 1872 states the consequence of the breach of contract as when a contract has been broken the party who suffers by such breach is entitled to receive from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew when they made the contract to be likely to result from the breach of it. Apart from the monitory compensation, the plaintiff may also ask for specific performance of a contract or other remedies.
It is to be mentioned that when a plaintiff or the person brings a suit to court by claiming that there has been a breach of contract between the parties then he must first establish that a contract existed between the parties. In some cases when any breach of contract occurs both the parties may come together and create a new contract or a solution to the breach by compensating or other. However, if the new agreement also fails to happen then an action can be taken through court or arbitration.
