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As a business owner, it’s important to have some knowledge surrounding business contracts and their purpose. A business contract helps each party to clearly understand the expectations and terms of a business dealing. Business contracts usually include the timeframe, details of the work that will be performed, and the cost for these goods or services. In addition to this, a contract should also outline the terms of what will happen in the event that the contract should be terminated or one party does not uphold their end of the agreement. Having contracts in place not only reduces the risk that one party will fail to uphold their end of the detail, but also make a contract easier to enforce. For business owners who are facing a breach of contract, it’s only natural that you will have a number of questions:


What should I do if someone has not upheld their end of the contract?

When a breach of contract has occurred, it is because someone has not followed the terms of the agreement that was in place. A breach of contract can have a serious impact on a business owner. However, you may be eligible for compensatory damages. In some cases, legal action may be necessary, however, you may want to consult with a lawyer, like a business dispute lawyer in Charlottesville, VA, to determine the most appropriate way to proceed.


What constitutes a breach of contract?

There are a number of ways that a business owner may experience a breach of contract:


  • The job that was completed was not up to standards or was lesser than what was expected
  • Not completing all of the work that they were hired to complete
  • Failing to pay for goods or services in a timely manner
  • Failing to deliver goods or services


By having a contract in writing, it may be easier to enforce the contract, or hold the other party accountable should it be in your best interest to take legal action. 


Are there different types of contract breaches?

Essentially there are four types of contract breaches that may occur depending upon your situation: 


  1. Minor Breach: A minor, or partial breach is less severe than a material breach. It gives the affected party the right to sue. However, they may still be required to provide future services within the contract. 
  2. Fundamental Breach: When one party fails to uphold their portion of the contract. As a result, the contract is cancelled. 
  3. Anticipatory Breach: This occurs when you realize that the other party may not fulfill their end of the contract. As a result, you may have the ability to terminate the contract and sue for the damages you may be facing. 
  4. Material Breach: A material breach is a severe breach, or total breach. In this type of situation, the contract may be irreparable. As a result, the contract may be terminated and you may have the option to sue for damages. 


If you are a business owner who is faced with a breach of contract with another party, it may be in your best interest to discuss your options with a business lawyer as soon as possible. 


Thanks to Dale Jensen PLC for their insight into business law.