Contracts are the cornerstone of business relationships because they set the expectations for the deal. These contracts typically include information about the scope of the project, payment terms and anything else that’s applicable to the deal.
While most contracts are completed without any issues, there are times when one party doesn’t uphold their end of the deal. These are known as contract breaches, and they can sometimes lead to litigation, depending on the type and severity of the breach.
Types of contract breaches
There are several different types of contract breaches, each of which is defined by the circumstances surrounding the breach.
- Material breach: This is the most serious kind of breach because it involves a primary part of the contract not being completed. This makes it impossible for one party to benefit from the contract in the intended manner.
- Minor breach: This means most of the contract was fulfilled, but there is something that wasn’t. The contract’s main purpose is met, but the breach may lead to increased expenses or inconvenience.
- Anticipatory breach: This means that one party makes it clear that they don’t intend to meet their obligations.
- Actual breach: This means that one party doesn’t do what they said they would, including directly countering the terms of the contract.
In some cases, parties may be able to work out the terms of the breach remedy together. This is often the preferred option because it’s typically less costly and time consuming than litigation. When the breach is serious and the damages are considerable, it might be necessary to take legal action. This requires the assistance of someone familiar with these matters to ensure the business’ interests are protected.