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Different ways that contracts can be breached

On Behalf of | Apr 18, 2024 | Business Litigation

In the business world, contracts are everything. They outline the rights and obligations of companies, clients, vendors, contractors and much more. 

When a contract is not honored, this is often referred to as a contractual breach. Breaches of contract usually occur in one of the following four ways.

Anticipatory breaches 

A breach of contract may occur before the agreed completion dates set out within the contract. For example, say you ordered a set quantity of goods to be delivered on a certain date. A week before the delivery date, you receive an email from the supplier saying that they are not going to be able to deliver due to an error on their side.

Technically, this is a contract breach and the affected party can pursue damages. However, due to the anticipatory nature of the breach, it is a type of breach that can often be addressed without litigation. For instance, both parties may be able to renegotiate the contract with a new delivery date and discount. 

Minor breaches 

Minor breaches occur when the majority of contractual obligations have been performed, with some minor exceptions. For example, a company may have received all of the goods they requested, but one of the items was damaged. 

Again, both parties may be able to rectify the situation quite easily, by arranging the delivery of a replacement for the damaged item. Nonetheless, pursuing damages may also be an option. 

Material and fundamental breaches 

Material and fundamental breaches are the most serious type of contract breach. These types of breaches occur when one party has not performed any of their duties under the contract. In such instances, there may be no option but to cancel the contract and pursue damages. 

If your business is facing a contractual dispute, it’s essential to seek legal guidance so that the situation can be appropriately rectified.