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Contracts & Legal

Breach of Contract

In Plain English

When a party fails to fulfill their promises under the contract.

Definition

A breach of contract occurs when one party fails to perform its contractual obligations without legal excuse. In construction, breaches include failure to complete work, non-payment, and failure to meet specified quality standards. The non-breaching party may be entitled to damages, termination rights, and other remedies.

Why It Matters in Bidding

Breach exposure shapes how estimators and GCs price risk, set contingency, and qualify bids, because a contract's remedies, damages, and termination clauses determine what failure actually costs. Reviewing breach-related terms before bidding helps a contractor flow down realistic obligations to subs and avoid signing into liabilities that erode margin.

Example

Before submitting, a GC's estimator reviews the prime contract's liquidated-damages clause and adjusts the schedule contingency in the bid because a late-completion breach would trigger penalties that flow down to the critical-path subs.

Related Terms

DefaultClaimTermination for CauseDispute Resolution

Frequently Asked Questions

Failure to perform a contractual duty without legal excuse, such as not completing work on schedule, abandoning the job, non-payment, or delivering work that fails the specifications. Whether it is material or minor affects remedies. Many disputes turn on whether the failure was excused by a change, delay, or owner-caused interference.
The non-breaching party may recover actual damages, withhold payment, terminate for cause, or pursue liquidated damages if the contract specifies them. Owners may complete the work and back-charge the contractor; contractors may suspend work or file liens. Available remedies depend heavily on the contract's specific terms and the breach's severity.
Read the prime contract before bidding, identify liquidated damages, indemnity, and termination clauses, and price contingency accordingly. Flow down obligations to subcontractors so risk sits with the party controlling the work. Clarify ambiguous scope through RFIs and document assumptions in the bid to protect against later disputes.

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