WHAT IS THE DEFINITION OF BREACH OF CONTRACT?
March 18, 2019
You’ve signed a contract with a company that you’re confident will take your business to the next level. The first few months of the partnership were great, and you saw your sales increase.
But more recently, the work hasn’t been delivered as contracted. Now, the person you’ve been working with at the other company isn’t returning calls, not answering emails.
Months go by, and your business has suffered because the other company failed to live up to the terms of the deal.
You might have a claim for breach of contract.
When you sign a contract, two parties are agreeing on a service or product that one side will provide and the other side will pay for. When one party doesn’t do what it agreed to do, they are in breach of contract. In other words, they broke the deal.
Contract breaches are deemed to be either “material” or “immaterial,” and those designations determine what action you can take. If the breach is classified as immaterial, that means the infraction was relatively minor in nature and did not cause any damage to your business. You likely wouldn’t receive a monetary award for damages.
In a material breach, damages are done. Think about this scenario: Business A promised to provide necessary parts for a product manufactured by Business B, which in turn is going to sell the finished product to Business C.
Business C needs the product on a specific date. If it isn’t delivered then, according to the contract, the deal is null and void. So if Business A’s late delivery means Business B can’t deliver its product on time, that is a cause to void the contract, and Business B has suffered a loss of income.
Business A is in breach of contract and could be required to pay damages for its failure to deliver to Business B.
That’s a simple look at the ABCs of breach of contract. An attorney experienced in business law will be able to analyze your case and determine if there is evidence of a material breach. It’s always wise to have an attorney on your side when you agree to a contract and again if its terms need to be enforced.