Contract

• A contract is an agreement between two or more parties which is enforceable under the law. A contractual relationship can arise verbally, in writing, explicitly or implicitly, but no contractual relationship exists unless several key elements are met: mutual assent, consideration, capacity and legality. Mutual assent means that both parties agree to the terms of the contract, while consideration is anything of value each party agrees to give to the other. In order to enter into a contractual relationship, you must have the legal capacity to do so, meaning you must be of sound mind or of a minimal age, and the contract must not be in violation of any law, such as contracting for the sale of illicit drugs.
  
  

Duties

• A contractual relationship imposes certain duties on each party. For example, if you contract with a company to build a home, the company agrees to build the home and you agree to take other actions, such as making periodic payments. The duties to which either party agrees are entirely up to them. As long as the parties do not include any terms that violate the law, they can agree to whatever duties they wish.
  
  

Breach

• A breach of a contractual relationship occurs whenever a party to a contract fails to perform any duty the contract requires. For example, if you agree to hire a roofer to fix your home within one week and the roofer fails to complete the project within that time, the roofer has breached the terms of the contract. Because a contract is legally enforceable, you have the right to sue the roofer in court for any damages you suffer because of the breach of contract.
  
  

Breach vs. Material Breach

• When a breach occurs in a contractual relationship, how the parties handle that breach differs based on the circumstances. For example, a complicated, in-depth contract between two parties involved in an ongoing relationship may have hundreds of provisions. The parties may break numerous provisions of the contract, but that doesn't necessarily mean any party breaches the contract. The parties can, for example, agree to negotiate such breaches to maintain the relationship, or modify the terms of the contract to take such situations into account. A material breach, however, is one in which a party fails to perform on a key provision of the contract, one in which often ends the contractual relationship.