Contracts are the foundation of most business relationships. When one party fails to follow through on its promises, it can lead to a breach of contract.
Understanding the different types of breaches can help you take the right steps to protect your business. Below are the main types of contract breaches in business law and some potential remedies.
Material breach
A material breach is serious. It means one party failed to perform a key part of the contract. For example, if a supplier agrees to deliver goods by a certain date and fails to do so, the other party may lose time and money. A material breach often gives the non-breaching party the right to end the contract and seek damages.
Minor breach
A minor breach, or partial breach, occurs when a party performs most of its duties but fails to meet some small part of the agreement. The contract usually remains in place, but the non-breaching party may still be entitled to compensation. For example, a builder may complete a job but use slightly different materials than agreed upon.
Anticipatory breach
This happens when one party tells the other, in advance, that it will not be able to fulfill its part of the contract. The non-breaching party does not have to wait for the deadline to take legal action. An anticipatory breach gives the wronged party time to prepare and seek another solution.
Legal remedies for breach of contract
If a contract is breached, common remedies include compensatory damages, cancellation of the contract, or specific performance. Specific performance means a court orders the breaching party to fulfill their promise.
Understanding your rights under contract law can help you avoid serious business risks. If a breach occurs, you may want to seek legal guidance to explore your options.