When running a business you’re likely to make a lot of contracts. Contracts help outline what is expected from another party that intends to provide a service to a business. Contracts can help ensure a business is running smoothly without having to step into dangerous legal waters.
Business contracts, however, can be breached if the contract isn’t fulfilled in some way. Contracts can be breached in several ways. Here are four of the basics:
Minor vs. material breaches
Contract breaches can be considered minor or material. A minor breach, also called a partial or immaterial breach, may mean a party failed to follow specific instructions on a contract despite a service being done or doing prohibited actions. Failing to be timely with a delivery or stepping into restricted areas of a building could be considered minor breaches – many contract breaches look minor but can cause a lot of problems for a business.
Material breaches may mean a service or item specified was different than what a contract requested. A material breach could look like a delivery of fish that ended up being pork to a wedding or a sink pipe that was repaired when it was supposed to be a bath pipe.
Actual vs. anticipatory breaches
Contract breaches can also be considered actual or anticipated. An actual breach is done when a party fails to complete their obligations promptly or didn’t complete their work as intended by a contract. A late food delivery, for example, could have caused a business to lose profits.
An anticipatory breach, on the other hand, is caused when a contracted party signifies that they don’t intend to complete their work ahead of the due date specified in a contract. This can put intense pressure on a business that may have been promised its needs would be met.
If your business is struggling because of a contract breach, then you may need to reach out for legal help.