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Understanding contract breaches 

On Behalf of | Apr 6, 2023 | BUSINESS & COMMERCIAL LAW - Contract Disputes

A contract is a binding legal contract that businesses use to ensure products, services and other agreements are properly and entirely fulfilled. 

Unfortunately, your business may suffer from a contract breach, which could result in untold damages. Here are a few basics every business owner should know about contract breaches and what they mean:

Minor breaches may not be actionable

A minor dispute occurs when an issue occurs with a service or product that does not significantly affect the terms of the agreement. This may happen even when most of the terms of a contract are fulfilled. A minor breach may have legal remedies.

For example, a minor breach could occur when a shipment of fabrics was meant to arrive on a specific date. The breaching party, however, delivered the fabrics one day later. As a result, the non-breaching party would have to take legal matters since the fabrics were delivered, albeit late.

Material breaches are often a cause of legal disputes

A material breach happens when a service is done wrong or the wrong product was delivered. As a result, a non-breaching party may suffer costly ramifications for the breaching party’s actions. 

If a bathroom was meant to be redone, for example, but the breaching party turned it into a closet, then there may be a material breach. The non-breaching party may make it a legal issue if there isn’t some kind of remedy, such as having the original terms of a contract met.

Anticipatory breaches give you a warning

Breaches may be known before the actual breach occurs. This could happen if the non-breaching party notices that the terms of a contract won’t be fulfilled. This could also happen if the breaching party notifies the other party that their services can’t be met. You may be able to mitigate your losses, but you may also have to eventually pursue a claim against the breaching party.

Actual breaches are clear violations of your agreement

A breaching party may, simply, refuse to fulfill a contract. There are often a lot of consequences if a contract is entirely unfulfilled — so these situations often result in legal action when there are no other possible resolutions.

Knowing more about how contract breaches occur and the terminology being used can help you understand all of your legal options.