When two businesses enter into a contract, each party expects the other to follow through on their promises. However, when one side fails to meet its obligations, it results in a breach of contract.
There are several types of contract breaches, each with its own legal consequences and potential legal remedies. Below are some important points to consider.
Material breaches
A material breach occurs when one party fails to perform a key part of the contract. This type of breach affects the core of the agreement and prevents the other party from receiving the full benefit of the deal. For example, if a supplier never delivers the agreed products, that is a material breach. In such cases, the non-breaching party may be able to seek financial damages.
Minor breaches
A minor breach happens when a party fails to meet a small part of the contract, but the rest of the agreement can still be carried out. For instance, if goods are delivered late but are still usable, the affected party might be able to seek compensation for the delay.
Anticipatory breaches
An anticipatory breach happens when one party tells the other in advance that they do not intend to fulfill their future obligations. The non-breaching party can treat this as an actual breach and pursue legal remedies before failure occurs.
Remedies for breach of contract
Depending on the situation, the harmed party may be entitled to compensatory damages, specific performance or contract cancellation and restitution. Each remedy aims to protect the non-breaching party’s rights and put them in the position they would have been in if the contract had been honored.
If your business is dealing with a breach of contract, it may be beneficial to seek some legal guidance.