Breach of contract has specific legal meaning. That meaning is: “Failure, without legal excuse, to perform any promise which forms the whole or part of a contract.” This legal definition raises a number of issues important to real estate agents who aid their clients in performing contracts. Notice first that the definition applies to the failure to perform “any promise” whether that promise forms the “whole or part” of the contract. This manner of defining breach of contract is necessary because the law distinguishes among types of breaches when assessing remedies.
The failure, without legal excuse, to perform the whole of a contract is called a material breach. A failure to perform only a part of a contract may not be material to performance of the whole. That is the case because minor or easily corrected breaches do not defeat the purpose of the contract or deprive the other party of the substantial benefit of the bargain. Non-material breaches may result in an award in damages, but they do not excuse the other party from performing their side of the contract. Only a material breach can excuse performance. This issue of material breach is discussed in detail shortly.
No discussion of contract breach would be complete, because it happens all the time in real estate, without at least a mention of Anticipatory Breach. Anticipatory breach occurs when one party, without legal excuse, makes a positive statement to the other party that they will not perform. This can happen when one party believes, erroneously, they have a legal excuse not to perform. It can happen when one party finds they cannot or do not want to perform as promised. Whatever the situation, a real estate agent should know enough about material and anticipatory breach to advise their client to seek legal counsel when non-performance occurs or is anticipated.
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