4 types of breach of contract disputes

4 types of breach of contract disputes

| Jan 29, 2021 | Business Law

In many ways, the success of a business is firmly rooted in the strength of its contracts. Whether the company is drafting initial contracts, revising them to match the changing needs of the business or protecting their interests when a violation occurs, the organization must pay close attention to how matters are handled.

A breach of contract can represent lost profits, lost productivity, fading employee morale or damaged vendor relationships. It is crucial that violations of terms are met swiftly. Businesses commonly face four types of contract breaches:

  • Material breaches of contract: A material breach occurs when the terms of the contract are clearly broken. Either one party has received significantly less benefit or received a significantly different result than was originally agreed-upon.
  • Minor breaches of contract: Alternatively called a “partial breach of contract,” a minor breach is said to occur when some terms of the contract are met, but the agreement is not fully satisfied. Common examples can include a late delivery or a shipment that does not contain everything that was ordered.
  • Anticipatory breaches of contract: When it becomes clear that one party will not fulfill their obligations, or they have stated that they will not satisfy the contract, an anticipatory breach is said to occur.
  • Actual breaches of contract: If one party fails to fulfill their obligations in terms of due dates, products promised or the duties that were performed, it is referred to as an actual breach of contract.

No matter the size of the business or the scope of the contract, an organization must protect itself. Whether drafting a vendor contract or reviewing a lease agreement, the business must take steps necessary to ensure their best interests are met. It is wise to seek the guidance of an experienced business law attorney through all stages of the process.