What Are the Elements of a Breach of Contract Claim?
March 27, 2023
Contracts tend to be essential parts of conducting business. Sometimes, there are circumstances in which one of the parties to a contract does not uphold their side of an agreement. In such cases, the need for business litigation may become unavoidable.
If you’re located in or around Toronto, Ontario, and you need a business litigator to represent you or your business, contact Matthew R Harris Law, P.C. for assistance. Lawyer Matthew Harris also proudly serves neighboring communities, including Hamilton, London, and Ottawa. Contact him to obtain trusted legal counsel for contract breach matters.
What Is a Breach of Contract?
Contract writers must exercise caution when drafting agreements. Vague or unclear terms may lead to costly business litigation. A prime example is the Supreme Court of Canada’s decision pertaining to the Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District. In summary, the 2021 ruling sided with Greater Vancouver, overruling a previous appellate court’s decision. According to Wastech, the breach occurred when the Greater Vancouver Sewerage and Drainage District decided to move the landfill site to a different location, causing them to lose profits. All told, the dispute took more than a decade to resolve.
In essence, a contract breach occurs when one party fails to fulfill their obligations under the terms of a legally-binding agreement, commonly known as a contract. This failure to perform can take many forms, such as failing to deliver goods or services as promised, failing to make payments on time, or violating any of the terms and conditions specified in the contract.
When one party breaches a contract, the other party may seek legal remedies such as suing for damages or specific performance. The extent of damages or remedies available will depend on the specific terms of the contract and the laws governing contract breaches in the relevant jurisdiction.
Types of Contract Breaches
The following circumstances constitute a contract breach:
This breach is a serious violation of the contract terms that affects the overall purpose of the contract. A material breach typically results in a significant loss to the non-breaching party and may allow the non-breaching party to terminate the contract and seek damages.
This breach is a less serious violation of the contract terms that does not affect the overall purpose of the contract. The non-breaching party may still be entitled to damages, but it does not typically allow for the termination of the contract.
This situation occurs when one party notifies the other party that they will not be able to perform their obligations under the contract before the performance is due. This allows the non-breaching party to terminate the contract and seek damages.
This situation is a breach of a key or essential term of the contract that is so significant that it frustrates the whole contract. A fundamental breach entitles the non-breaching party to terminate the contract and claim damages.
This occurs when one party fails to perform only part of their obligations under the contract. The non-breaching party may still be entitled to damages for the partial breach.
Elements of a Contract Breach Claim in Ontario
To successfully bring a claim for contract breach, the non-breaching party must typically establish the following elements:
The existence of a valid and enforceable contract. The non-breaching party must show that there is a contract in place between the parties and that it is legally binding and enforceable.
The non-breaching party's performance. The non-breaching party must demonstrate that they have fully performed their obligations under the contract or have a valid excuse for non-performance.
The breaching party's failure to perform. The non-breaching party must show that the other party has failed to perform their obligations under the contract, either by not performing at all or by performing in a manner that is not per the terms of the contract.
Damages resulting from the breach. The non-breaching party must show that they suffered damages as a direct result of the breach, such as financial losses, lost profits, or other costs incurred.
Mitigation of damages. The non-breaching party must demonstrate that they took reasonable steps to mitigate their damages, such as finding alternative sources of goods or services or taking steps to minimize the impact of the breach.
Timeliness. The non-breaching party must bring the claim within the applicable statute of limitations, which is the period within which legal action can be filed.
What Is Anticipatory Repudiation?
Anticipatory repudiation, also known as an anticipatory breach, occurs when one party to a contract explicitly or implicitly communicates to the other party that they will not perform their contractual obligations in the future before the time for performance has arrived. This communication may be in the form of a statement, action, or other conduct that demonstrates a clear intent to not fulfill the terms of the contract.
Anticipatory repudiation essentially amounts to a renunciation of the contract, allowing the non-breaching party to treat the contract as terminated and pursue legal remedies for breach of contract. The non-breaching party may elect to terminate the contract immediately or wait until the time for performance has passed before treating the contract as terminated.
If the non-breaching party chooses to treat the contract as terminated, they may seek legal remedies such as damages, specific performance, or restitution for any losses suffered as a result of the anticipatory repudiation. It is important to note that the non-breaching party must have a reasonable basis for believing that the repudiation is unequivocal and that the other party has no intention of fulfilling their obligations under the contract.
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