Difference Between Breach of Contract and Breach of Warranty

Hypothetically, agreements entered into would benefit parties involved with no disputes, and both parties getting the desired outcomes. In real life, however, many events such as financial difficulties, delays, and even unforeseen catastrophic events occur, thus hindering or interfering with the agreements. When this happens, a breach of agreement, which has consequences is said to have occurred. Some examples of breach of agreements include breach of contract and breach of warranty. While both refer to breach of agreements, the remedies for each are different.

What is Breach of Contract?

This refers to the failure of a party to fulfill set obligations based on formal agreements to another party, which can attract legal liabilities. Since contracts enforcement is part of legally binding contracts, the parties expect to get full benefits of the deal agreed in the contracts, failure to which the innocent party has a legal right to compensation.

A contract is legally binding when:

• There is an offer
• The receiving party accepts the offer and the conditions
• There is consideration including a promise to pay, to do something or not to do something
• The intention by both parties to be legally bound
• Both parties have contractual capacity

Common forms of contract breaches include delayed performance, defective performance, and complete non-performance. While the first step would be to negotiate with the other party before pursuing legal actions, this may not always yield results. Other remedies to breaches include;

• Monetary compensation
• Termination of the contract
• An injunction to restrain further contract breaches
• Contracts specific performance

Types of breach of contracts include:

• Condition- Also referred to as fundamental terms, this is a claim on damages incurred due to the breach as well as contract termination.
• Warranty- This is a claim on damages caused as a result of the contract breach.
• Innominate/ Intermediate- Termination of a contract depends on the consequences of the breach.

What is Breach of Warranty?

This is a breach of assurance made to a buyer by a seller on various areas such as performance and quality of products, employment issues, ownership of shares and even intellectual property rights. Breach of warranty occurs when a product or service fails to meet the promised standards in either the implied or explicit warranty. In instances where this happens, remedies include;

• Cancellation of the contract
• Purchase of substitute goods to recover the contractual price

Similarities between Breach of Contract and Breach of Warranty

• Both refer to a breach of agreements

Differences between Breach of Contract and Breach of Warranty

Definition

A breach of contract refers to the failure of a party to fulfill set obligations based on formal agreements to another party, which can attract legal liabilities. On the other hand, a breach of warranty is a breach of assurance made to a buyer by a seller on various areas such as performance and quality of products, employment issues, ownership of shares and even intellectual property rights.

Remedies

The remedies to the breach of contracts include monetary compensation, termination of the contracts, injunction to restrain further contract breaches and contracts specific performance. On the other hand, remedies to the breach of warranties include cancellation of the contract and purchase of substitute goods to recover the contractual price.

Breach of Contract vs. Breach of Warranty: Comparison Table

Summary of Breach of Contract vs. Breach of Warranty

While many people may not differentiate breach of contract and breach of warranty, it is essentially important when one is taking legal action. While breach of contract remedies include monetary compensation, termination of the contracts, injunction to restrain further contract breaches and contracts specific performance, breach of warranties remedy include cancellation of the contract and purchase of substitute goods to recover the contractual price. It is, however, important to avoid a breach of contracts as it can lead to loss of business and even ruined reputations.

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