A contract establishes a legally binding agreement between parties. Contracts outline the obligations each party is expected to fulfil and how they benefit from the business transaction. A contract breach refers to when a party fails to fulfil their end of an agreement.
There are two common types of contract breaches: material and minor. It is important to understand both of these types of contract breaches to identify the severity of a violation. Here is what you should know:
Partial breach of contracts
A minor breach refers to a small, often superficial issue with how a party completed their contractual obligations. A contracted party may have missed part of a contract’s terms that otherwise does not impact other parts of the contract. Despite a minor breach occurring, a party has fulfilled their contractual duties.
For example, a party may have ordered wood for a new home. The contracted party may have missed the shipping deadline, causing the wood to be delivered a day late. However, the delivery of the wood did not delay the construction of the new home.
When a minor breach occurs, it may not be necessary to compensate the non-breaching party if the same outcome occurred as if there was no breach.
Major breach of contracts
A material breach refers to a serious breach of contract as a result of a party failing to fulfil their contractual obligations. A breaching party may have failed to uphold a major part of the contract, resulting in serious damages and delays.
For example, a party may have been contracted to deliver wood for a new home. However, the shipment was never delivered, causing the construction of the home to be halted.
When a material breach occurs, the non-breaching party may pursue compensation for damages and delays. In some cases, the breaching party may still be expected to fulfil the terms of a contract.
Professional legal guidance can help parties negotiate and settle contract breaches.