What is a
breach of contract?

By Jonathan Kleiman, Barrister & Solicitor · Published June 2026

A deal was made. One side did not hold up their end. Now you are out money, time, or both — and you want to know where you stand. That is the situation behind almost every breach of contract dispute, and it is one of the most common reasons people call a breach of contract lawyer in Toronto.

This guide explains what a breach of contract actually is under Ontario law, the different types of breach, what you have to prove to win, the remedies a court can award, and the deadlines that can quietly destroy an otherwise strong claim. None of this is legal advice for your specific situation — but it should give you a clear, accurate picture of how breach of contract works in Ontario.

What is a breach of contract?

A breach of contract occurs when one party fails to perform an obligation under a valid, binding contract without a lawful excuse. In plain terms: the parties agreed to do something, one of them did not do it, and there is no legal justification for the failure.

A breach can take many forms. It might be a buyer who never pays an unpaid invoice, a contractor who walks off a renovation half-finished, a supplier who ships defective goods, a tenant who leaves before the lease term is up, or a former employee who ignores a valid non-compete. What ties all of these together is the same core idea: a promise was made inside an enforceable agreement, and the promise was broken.

Importantly, not every broken promise is a breach the law will act on. The promise has to live inside a contract the courts recognise, and the failure has to be one the other side cannot legally excuse. That is why the first real question in any breach case is not "did they let me down?" but "was there a binding contract in the first place?"

First, was there a legally binding contract?

Before a breach can exist, there has to be a contract to breach. Under Ontario law, a legally binding contract generally requires five elements:

1. Offer — one party proposed specific terms.
2. Acceptance — the other party agreed to those terms.
3. Consideration — each side gave something of value (money, goods, services, or a promise to do or not do something).
4. Intention to create legal relations — the parties intended the agreement to be legally enforceable, not a casual or social arrangement.
5. Capacity — both parties were legally able to contract (of legal age, of sound mind, and not acting under duress).

A contract does not have to be a formal, signed document. A binding agreement can be created by an exchange of emails, a text message thread, a purchase order, or even a conversation. Verbal contracts are enforceable in Ontario — the problem is never whether they count, it is whether you can prove what was agreed. If your deal was never written down, start gathering everything that supports it: emails, texts, invoices, payment records, quotes, and the names of anyone who witnessed the agreement.

The main types of breach of contract

Not all breaches are equal. The type of breach matters because it determines what you are allowed to do in response — in particular, whether you can treat the whole contract as over, or whether you have to keep performing your own side while you claim for your losses.

Material (fundamental) breach

A material breach — sometimes called a fundamental breach — is a failure so significant that it defeats the core purpose of the contract. It goes to the root of the deal and deprives the innocent party of substantially the whole benefit they bargained for. When a breach is material, the innocent party can usually treat the contract as terminated, stop their own performance, and sue for damages. Example: you hire a company to build a custom piece of equipment and they deliver something that does not work and cannot be fixed.

Minor (partial) breach

A minor breach is a smaller failure that does not destroy the value of the contract. The innocent party can claim damages for the loss caused by the breach, but generally must still perform their own obligations — they cannot walk away from the whole deal. Example: a contractor finishes the job properly but a week late, causing you a modest, quantifiable loss. You can claim that loss, but you still owe the contract price.

Anticipatory breach

An anticipatory breach happens when one party makes it clear — by words or conduct — that they will not perform their obligations before performance is even due. You do not always have to wait for the deadline to pass. If the other side clearly signals they will not perform, you may be entitled to treat the contract as breached immediately, stop your own performance, and sue. Because the rules here are technical, this is a point where early legal advice genuinely matters.

Repudiation

Repudiation is closely related: it is conduct that shows one party no longer intends to be bound by the contract, or no longer intends to perform a fundamental term. Faced with a repudiation, the innocent party generally has a choice — accept the repudiation and end the contract (then sue for damages), or insist that the contract continue. The choice you make has real legal consequences, so it should not be made on instinct.

Conditions vs. warranties — why the wording matters

Contract terms are not all the same weight in the eyes of the law. Courts often distinguish between:

• Conditions — essential terms that go to the heart of the contract. Breaching a condition is typically treated as a serious (often material) breach, opening the door to termination and damages.
• Warranties — less central terms. Breaching a warranty usually entitles the innocent party to damages, but not to tear up the whole contract.

Whether a given term is a condition or a warranty depends on how important it was to the bargain, not just on the label the parties used. This is one of the reasons a careful reading of the agreement by a contract dispute lawyer can change the whole strategy of a case.

Common examples of breach of contract

In day-to-day practice, the same handful of scenarios come up again and again:

• Non-payment — a customer or client refuses to pay an invoice for goods delivered or services rendered.
• Non-delivery — a supplier takes the deposit and never ships the goods.
• Defective or substandard work — a contractor's work fails to meet the agreed specification or basic quality standards.
• Late performance — a deadline that mattered is missed, causing real loss.
• Abandoned projects — a renovation, build, or service contract is walked away from partway through.
• Breach of a restrictive covenant — a former employee or seller of a business ignores a valid non-compete or non-solicitation clause.
• Failure to honour a settlement or repayment agreement — a party who agreed to pay in instalments stops paying.

Many of these are exactly the kinds of claims that end up in Small Claims Court, where most disputes up to $50,000 are heard in Ontario.

What you have to prove

To succeed in a breach of contract claim, you generally have to establish four things, on a balance of probabilities (more likely than not):

1. A valid contract existed — there was a binding agreement with the elements above.
2. You performed (or were ready to perform) your obligations — you did your part, or were willing and able to.
3. The other party breached — they failed to perform an obligation without lawful excuse.
4. You suffered a loss caused by the breach — the breach led to quantifiable damage.

Evidence is everything. The party who keeps the better records usually has the stronger case. Hold on to the contract, every relevant email and text, invoices, payment records, photos, change orders, and notes of any verbal conversations (with dates). Documenting the breach clearly — what obligation was broken, when, and what it cost you — is often the difference between a claim that settles quickly and one that drags.

What remedies are available for breach of contract?

If you prove a breach, the court can award several types of remedy. The goal of contract damages is not to punish the other side — it is to put you in the position you would have been in had the contract been performed.

• Expectation damages — the most common remedy. Money to give you the benefit you expected from the deal (for example, the unpaid contract price, or the cost of getting the work done properly by someone else).
• Consequential (special) damages — further losses that flow from the breach and were reasonably foreseeable at the time the contract was formed, such as lost profits. These have to be proven, not assumed.
• Reliance damages — compensation for expenses you reasonably incurred in reliance on the contract, used where expectation damages are hard to calculate.
• Liquidated damages — a pre-agreed amount set out in the contract itself. Courts will enforce a genuine pre-estimate of loss, but will not enforce a clause that is really a penalty designed to punish.
• Nominal damages — a small, symbolic award where there was a breach but little or no actual financial loss.
• Specific performance — a court order requiring the breaching party to actually do what they promised. It is reserved for cases where money is not an adequate remedy, such as the sale of unique property.
• Injunction — a court order stopping a party from doing something, often used to enforce restrictive covenants like non-competes.

One critical rule applies to almost every claim: the duty to mitigate. The innocent party must take reasonable steps to limit their losses. If you could have reduced your loss but did not, the court can reduce your damages accordingly. You cannot let a loss balloon and expect the breaching party to cover all of it.

How long do you have to sue for breach of contract?

This is the deadline that catches people out. Under the Limitations Act, 2002, you generally have two years from the date you discovered (or ought reasonably to have discovered) the breach to start a legal proceeding. Miss that window and your claim becomes statute-barred — the court will dismiss it no matter how strong it is on the merits.

There is also an ultimate limitation period of 15 years from the act or omission that caused the claim, regardless of when it was discovered. Limitation dates can be surprisingly tricky — the clock may start later than you think, or earlier — so do not guess. Run your dates through our free Ontario limitation period calculator and, if anything is close, speak to a lawyer right away to protect your right to sue.

Where do you sue for breach of contract in Ontario?

Ontario has two main civil courts, and the right one depends mostly on how much you are claiming:

• Small Claims Court — for claims up to $50,000. It is faster, less formal, and far less expensive than Superior Court. The rules are simplified, filing fees are lower (you can price every step with the filing fee calculator), and many people represent themselves. See our step-by-step guide to suing in Small Claims Court.
• Superior Court of Justice — for claims over $50,000, or where you need an equitable remedy like specific performance or an injunction. Proceedings are more complex, take longer, and require strict compliance with the Rules of Civil Procedure.

How much is a breach of contract claim worth?

The headline value of a claim is your provable loss — but the real number is usually larger than the unpaid amount alone, and sometimes smaller than people expect once mitigation is taken into account. A realistic estimate has three moving parts:

• Damages — the loss you can actually prove, reduced by anything you could reasonably have done to limit it. For a money claim, you can estimate the all-in figure with our Small Claims Court calculator.
• Prejudgment interest — successful parties are generally entitled to interest from the date the cause of action arose, under the Courts of Justice Act. It can add up over a long dispute — estimate it with the prejudgment interest calculator.
• Costs — a party who wins usually recovers a portion of their legal costs and disbursements from the other side. Amounts are limited in Small Claims Court; the cost award calculator shows the typical range.

Weigh that total against the cost, time, and risk of pursuing it — and against whether the other side can actually pay a judgment. A claim you can win on paper is only worth pursuing if it is also collectable.

What to do if a contract has been breached

If you think you are on the receiving end of a breach, the path forward is usually some version of the following:

1. Confirm the contract and the breach. Identify the exact obligation that was broken and gather your evidence.
2. Check the contract's own terms. Look for notice requirements, dispute-resolution clauses (mediation or arbitration), and any cap on damages — these can change what you must do first.
3. Send a demand letter. A clear, firm demand letter sets out the breach, states what you want, and gives a deadline. Many disputes settle here. You can build a draft in minutes with our free Ontario Demand Letter Generator.
4. Negotiate or mediate. Direct negotiation or mediation resolves a high share of disputes without the cost of a trial.
5. Litigate if needed. If the matter does not resolve, the next step is a claim in Small Claims Court or Superior Court. See our guide to enforcing a contract in Ontario.

Defences to a breach of contract claim

It is also worth understanding the other side of the table. A defendant will not always simply admit the breach — common defences include:

• No valid contract — one of the five elements was missing, so there was nothing binding to breach.
• The term was satisfied or waived — the obligation was actually performed, or the other party agreed to excuse it.
• The claimant breached first — the defendant's non-performance was a response to the claimant's own breach.
• Misrepresentation, mistake, or duress — the contract was induced by a false statement, a fundamental shared mistake, or pressure.
• Frustration — an unforeseen event made performance impossible or radically different from what was agreed, through no fault of either party.
• Limitation period expired — the two-year deadline passed before the claim was started.

Whether you are bringing a claim or defending one, knowing which of these is in play early shapes the entire approach.

When to talk to a lawyer

You are not legally required to hire a lawyer for a breach of contract dispute, and in Small Claims Court many people do represent themselves. But a lawyer adds real value: assessing whether you actually have an enforceable contract, valuing the claim, drafting a demand letter that gets taken seriously, identifying defences and limitation issues, and handling negotiation or court. The earlier you get advice, the more options you tend to have — especially before a limitation deadline gets close.

Frequently asked questions

What counts as a breach of contract in Ontario?

A breach happens when one party fails to perform an obligation under a valid contract without a lawful excuse — not paying, not delivering, delivering late or defectively, or refusing to perform. The contract can be written or verbal, as long as you can prove its terms and the breach.

What is the difference between a material breach and a minor breach?

A material (fundamental) breach defeats the core purpose of the contract and lets the innocent party end the deal and sue for damages. A minor breach is a smaller failure — you can claim your losses, but you generally still have to perform your own side of the bargain.

Can you sue for breach of a verbal contract in Ontario?

Yes. Verbal contracts are binding in Ontario. The challenge is proof — you need emails, texts, invoices, payment records, or witnesses to establish the terms and the breach. A contract dispute lawyer can assess how provable your agreement is before you commit to a claim.

How long do you have to sue for breach of contract in Ontario?

Generally two years from when you discovered (or ought to have discovered) the breach, under the Limitations Act, 2002. After two years the claim is statute-barred. There is also a 15-year ultimate limitation period. Check your dates with the limitation period calculator.

What can you recover for a breach of contract?

Usually expectation damages — money to put you where you would have been had the contract been performed — plus reasonably foreseeable consequential losses. In limited cases the court orders specific performance or an injunction. Remember the duty to mitigate: you must take reasonable steps to limit your losses.

Talk to a Toronto business lawyer

If a contract has been broken and you want to know where you stand, call 416-554-1639 or book a free consultation.