Breach of Contract
Business contracts are designed to set forth obligations that require fulfillment by certain parties. Although these agreements are drafted with hopes for successful outcomes, this does not always happen. Circumstances such as financial problems, unforeseen delays, and other unanticipated events can stop or hinder these contracts from being carried out. Breaches occur when a party does not perform according to the contract’s terms, fails to perform within the specified time frame, or does not perform at all.
In legal terms, when one party does not fulfill any of their contractual obligations, this is called a breach of contract. These are categorized as material or immaterial, which pertain to finding the right legal solution for said breach.
Material Versus Immaterial Breaches
Also called a total breach, this is when a breach of contract goes to the basic root of the agreement, damaging and defeating its entire purpose. An example of this could be an individual that agreed to sell a specific house to a buyer. If closing day arrives and the seller has a different house to sell instead, this could qualify as a material breach. The buyer would not have the house they wanted and might need to start the whole process over with another seller. This party may wish to end the agreement and then file court proceedings to collect damages.
Immaterial breaches do not affect the main purpose of the business contract; this is when most of the contract’s specified duties have been fulfilled. If a seller agreed to turn over the house to the buyer on a Wednesday but it was delayed until Thursday, this breach would likely be immaterial.
Legal Options for Breach of Contract
In order to build a credible breach of contract case, the first step is to look at the facts. Implied or verbal contracts can be difficult to verify if there is no recorded contract. A plaintiff will need to prove that a contract existed, that is was broken by the other person, that they lost money, and that the defendant was responsible for the loss.
The business contract in question must also be enforceable, and follow a formula showing that one party made the other an offer, which was accepted, and both agreed on compensation or consideration for goods or services to be exchanged. However, some contracts that were never formally executed may still be enforceable in certain cases, though.
