Breach of Contract Basics

For most business owners and large corporations, contracts are essential to everyday operations. Covering everything from scheduled deliveries and employee salaries to trading assets to truces between competitors, business contracts really are the lifeblood of the world of business. At their roots, each contract outlines a tit-for-tat agreement – party A does X for party B, and party B does Y for party A; in legal definitions, these agreements are known as compromises.

In an ideal situation, a contract will always be upheld and everyone will get along just fine. Since none of us can predict the future, though, ideal situations are hard to come by. So what can you do when a compromise is not honored and a contract is breached? How you handle the situation could either hurt or help your business.

Aspects of a Contract Breach

Before you can start trying to remedy a contract breach, you first need to understand how it came about. Consider the following common circumstances that are involved with contract breaches:

  1. Legal invalidation: In some situations, the contract itself might be deemed legally invalid, meaning it has significant flaws in its verbiage that make it unusable, and therefore it must be breached. As an example, truckers cannot be expected to follow an employment contract that tells them to illegally speed down highways to make deliveries.
  2. Material breach: Sometimes called a total breach, a material breach involves one party doing – or not doing – something that makes the contract itself irreparably broken. A simple example would be one party flat-out refusing to pay for services rendered.
  3. Anticipatory breach: When a party gives strong reasoning as to why it will be unable to perform its duties in the future, an anticipatory breach may have occurred. For instance, if your business partner who owes money as part of their compromise tells you that their finances have run dry, you have sound logic to assume they will soon breach the contract.
  4. Damages: In most breach of contract cases, you will need to show that the breach actually caused you some sort of financial harm, known as damages. Just expecting to lose profits or services might not be enough to build your case.

Now that you know some of the basics of contract breaches, do you think you might have a business litigation case on your hands? For more information or to start working on your claim, you can contact our Monmouth County business attorneys from Reardon Anderson, LLC today. Our team of friendly and knowledgeable professionals have more than 75 years of experience handling a wide variety of business slaw disputes and issues. Whatever problem you are facing, you can bring it to us for help. Call 732.997.7749 today.


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