If you are in business, you likely have several contracts that you have signed. What happens you or someone involved in your business isn’t living up to their end of the contract? It’s a question that you should always have on your mind. Breach of contract occurs when an agreement between two business entities is broken in some way. This can result in legal action and can only occur if a valid contract actually exists. Hiring a business lawyer to help with these types of situations is absolutely vital. Below, we will discuss some of the most common breaches of contract in business law so that you have a better idea of what you might deal with as a business owner.
1. Partial Breach of Contract
If some but not all of the terms in a contract are broken, you are dealing with a partial breach of contract. Mistakes happen, which is why you always want to make sure you fully understand contractual obligations before you sign. With a partial breach of contract, the injured party can only sue for actual damages. That means they can only take legal action for the specific parts of the contract that were broken. Some common examples that might result in a partial breach of contract are failing to complete a job, not paying on time, or not paying for the goods or services that were agreed in the contract.
2. Material Breach of Contract
If one of the contractual parties fails to perform their duties in a way that destroys the value of the contract, you are dealing with a material breach of contract. The damaged party can sue for the damages and also be relieved of their own contractual obligations in a material breach of contract. You definitely want to make sure you have a great business lawyer if you are dealing with a material breach of contract. This is a serious legal matter that doesn’t leave you room for error.
3. Fundamental Breach of Contract
The injured party can terminate the contract and/or sue the breaching party for damages when there has been a fundamental breach of contract. This essentially means that a fundamental part of the contract was not performed. You might even be entitled to specific performance if this is the type of breach you are dealing with and you are the damaged party. Remember that having a business attorney by your side during these types of legal situations can make all of the difference in the world. They can let you know the best course of action and help you understand what exactly is going on.
Remember that to have a breach of contract, the contract must be valid. Things that valid contracts consist of are an offer of value for goods and services, acceptance by both parties of the contract, and each party offering consideration or an item of value. If you have any questions related to what makes a contract valid or if you are dealing with a breach of contract, contact the offices of Derryberry & Associates LLP today.