Businesses large and small rely on contracts to ensure their business grows, runs smoothly and maintains employees. Thus, when issues concerning a contract arises, it could have significant ramifications on the business. As such, it is important to understand the contract dispute at hand and the available remedies.
While contract disputes could happen at any phase, such as initial negotiations, drafting or after it is executed, the focus of this post will be on a breach of contract.
Breach of contract
What is a breach of contract? In simple terms, it is when one party of the contract does not fulfill their obligations outlined in the agreement or fails to act in good faith. Material breach, minor breach and anticipatory breach are the types that will be discussed further.
A material breach involves a serious violation of the terms of the contract. Such a breech often impacts the overall purpose of the contract, essentially making the contract obsolete. As such, the non-breaching party could seek legal remedies, including damages, halting further obligation or the termination of the contract.
Unlike a material breach, a minor breach is often referred to an immaterial breach. A minor breach involves one party failing to perform a small part of the contract, likely deemed less essential. While a minor breach is likely not a situation that would terminate a contract, it is likely a matter you could seek damages for.
Finally, an anticipatory breach occurs involves one party indicating beforehand that they will not be fulfilling their contractual obligations. This is either done by words or actions of the breaching party. In this matter, the non-breaching party could act immediately and does not need to wait until the contractual obligation was due.
Remedies available
A breach of contract has two types of remedies available. This includes monetary damages and injunctive relief. With regards to monetary damages, these can be available in several different types, including compensatory damages, restitution, punitive damages, nominal damages, liquidated damages and quantum meruit.
An injunctive relief means the court orders the breaching party to do something. Often this includes the cancellation of the contract or specific performance by the breaching party to perform the service or deliver the goods outlined in the contract.
If you are dealing with a contract breach or any other type of contract dispute, it is important to understand your legal rights, options and remedies available.