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What is a Breach of Contract?

In this day and age, a simple handshake is not sufficient to seal a business deal. The business world today is held together by contracts and legal documents that outline the specific details of an agreement between two parties. Contracts are everywhere, both seen and unseen, and you encounter more than you may realize each day. For example, you have a contract with your employer who agrees to monetarily compensate you for the work you perform. You may have a contract with a car dealership to fulfill monthly car payments, a contract with state driving laws when you get behind the wheel, or even simply clicking "I accept the Terms and Conditions".

With so many contracts binding society together, a breach of contract is bound to happen. Put briefly, this civil wrong occurs when one of the parties bound by a contract fails to honor the terms and conditions agreed upon by all parties involved. Both giant and small businesses are subject to agreement issues, and disputes are not uncommon in the real estate world either.

Breaches of contract fall under one of three major categories: Minor, Material, and Anticipatory.

Minor Breaches of Contract

As the name suggests, minor breaches of contract rarely warrant any sort of serious litigation or contract termination. This occurs when a party in an agreement honors the major components of the contract, but perhaps fails to uphold several smaller details required of them. For example, you may decide to purchase an expensive television and wall mount bundle from your local electronics supplier--a contract that states the supplier will provide you a complete, working product in return for the posted retail price. You would be experiencing a minor breach of contract if you returned home with your television bundle and discovered that a wall mount screw was missing. In this case, the supplier is legally obligated to replace the missing screw.

Material Breaches of Contract

Material breaches, on the other hand, are a much more serious issue. This occurs when a party in a legal agreement, whether intentional or unintentional, fails to uphold the major terms and conditions of a contract. Unlike minor breaches, monetary damages incurred as a result of a material breach could spiral upwards of thousands or even millions of dollars. Serious lawsuits are often the consequences--and in some cases, termination of contract can be a result as well. To continue with the previous example, you would be a victim of a major contract breach if you opened your television bundle to see a completely different television model than the one you purchased. The supplier would be legally obligated to replace the incorrect television set or refund your money.

Anticipatory Breaches

Anticipatory breaches can either be small or serious. These occur when a breach is anticipated to happen in the future. A party may announce before a due date that it refuses to honor the agreement, or an innocent party may realize this on its own. Unlike the previous two breaches, anticipatory breaches can be difficult and time consuming, as lawyers and judges must handle an action that has not necessarily occurred yet. However, anticipatory breach cases can certainly award the innocent party compensation, providing it fights for its rights.

Have you experienced a breach of contract in an agreement? The first step is to seek expert legal advice. Colley & Colley can help you understand your options and will defend your rights in court. Contact an experienced attorney today.