Contracts help businesses run smoothly and ensure agreements between parties aren’t broken. Yet, despite hours of legal consideration and careful documentation, a contract can be breached. A contract breach is any kind of violation of agreed-upon terms in a legally binding contract.
A breached contract can cause irreparable harm to businesses, companies and vendors, which is often why hurt parties seek compensation. A contract itself doesn’t often explicitly say how it may be breached. Instead, a contract may specify how a breach is dealt with. For example, a party who failed to deliver goods may not be paid for their service in full.
There are a few ways a party may cause a breach of contract. Here’s what you should understand:
Anticipatory vs. actual breach of contract
A breach may be anticipatory or actual. An anticipatory breach occurs when a party realizes the contracted party will fail to deliver their goods or finish their service in full by the due date. The breaching party may even declare beforehand that they won’t fulfill their duty by the due date. If this happens the non-breaching party may take legal action to compensate for their damages before the breach occurs.
Conversely, an actual breach happens when a party refuses to fulfill their duties by the due date stated in a contract. An actual breach may also occur if the breaching party performs its duties incorrectly.
Minor vs. material breach of contract
Additionally, a contract breach may be minor or material. A minor breach occurs when a service was performed or a product was delivered, but some part of the contract was unfulfilled. For example, there may have been a crate of apples missing out of a dozen. The other eleven crates were delivered, however, the one missing crate caused a minor breach and resulted in damages.
A material breach occurs when a service or product was delivered, but it was entirely different than was requested in the contract. For example, there may have been an order of a dozen crates of apples. Upon arrival, all twelve crates were countered, however, every crate was full of oranges.
A contract breach can do serious harm to a business or company. If you believe a contract was violated, then you may need to understand your legal rights.