The 4 Types Of Contract Breaches And What They Mean For You
A contract breach can be an expensive and wide-reaching loss for any company. When another party breaks a contract, suing in civil court may be your only way to get the compensation you need to recover. But before you make any decisions about how to proceed, it's important to begin by understanding how a contract may be breached. To help, here's what you need to know about the four types of breaches.
Did you know that you can take legal action even before a contract is technically broken? This is known as an anticipatory breach, and it occurs when it's clear that the other side will no longer be able to or choose to fulfill it.
For example, a small brewery orders hops from a supplier. The supplier, though, closes its operation due to an employee strike. If they state or it becomes obvious that they will not fulfill the contract, the brewery may be able to ask the court to declare the contract already broken. This allows the brewery to recoup both money and time to find another supplier before the deadline.
The actual breach is the most common type of breach that comes to civil courts. The contract's terms and conditions have been demonstrably broken. In the case of the beer brewer, the deadline has passed and no hops have been delivered. Or the hops that were delivered was completely different than the contract specified. Financial losses have generally already begun to occur. The only recourse in most cases is compensation.
Material in this sense refers to something fundamental about the contract. If the brewery needs Citra hops for the fruity flavors but receives the more earthy Willamette hops, its beer will be fundamentally different than intended. In this case, they may argue that while hops were delivered, the wrong items are materially different than what the contract called for. This is a serious breach.
Finally, there is a minor breach. For legal purposes, a minor breach is one which has a much smaller effect on the contract's purpose than a material one. It may be thought of more in terms of a partial breach. Perhaps the hops were delivered as ordered, but a delay in shipping caused them to be a day or two late. While the supplier technically breached the contract, the breach was minor — unless the deadline is key to fulfillment.
Where to Learn More
What type of breach do you face? What recourse may be available? And how is time a factor? Learn more by reaching out to a local law office, like the Law Offices of Eric K. Krasle.