Oregon Construction Contractors (CCB) Practice Test

What type of breach is associated with compensating a non-breaching party for economic losses?

1. Negligent breach

2. Willful breach

3. Material breach

4. Breach of contract

The correct answer is: Breach of contract

The type of breach associated with compensating a non-breaching party for economic losses is classified as a breach of contract. This occurs when one party fails to fulfill the obligations set forth in the contract, leading to financial harm or other types of damages for the other party. In the context of contract law, all breaches of contract can warrant compensation depending on the situation. The non-breaching party may pursue remedies such as monetary damages to recover losses directly resulting from the breach. This is foundational in contract law, emphasizing the principle that a party should not be unjustly enriched at the expense of another and should be made whole for losses incurred because of a failure to uphold a contractual agreement. Other types of breaches, while important, have different implications. For example, a negligent breach typically involves a failure to exercise reasonable care, a willful breach signifies a deliberate failure to perform, and a material breach indicates a significant failure that adversely affects the contract's overall purpose. However, regardless of these distinctions, the overall mechanism for addressing the economic losses caused by any kind of breach usually falls under the broader category of breach of contract, which seeks to ensure that non-breaching parties are compensated for their losses.