Businesses use contracts to outline the responsibilities they have with other businesses when they make deals with each other. These contracts are set up to protect both parties throughout the matter. Most contracts are handled appropriately and end with both sides having what they should have.
There may be times when a contract doesn’t end as it was intended. Instead, one party may not fulfill its obligations that are outlined in the contract. This is known as a breach of contract.
Breaches vary in severity
Not all breaches are the same. Instead, some are minor and some are material, which is a major breach. A minor breach is something that’s an inconvenience. A material breach undermines the entire meaning of the contract.
All breaches are classified as anticipatory or actual. An anticipatory breach occurs if there’s a notice that one party won’t be able to uphold their end of the contract. An actual breach occurs when one party refuses to meet its obligations.
Resolving a breach can be complex
There are several ways that a contract breach can be resolved. Both parties may compromise to come up with a suitable resolution. It’s also possible that alternative dispute resolution (ADR) methods, such as mediation or arbitration, may resolve the matter. If there’s not a requirement in the contract to use ADR, litigation might be necessary.
Seeking the assistance of someone familiar with contracts may be beneficial. Ultimately, it’s best to find resolutions that are in your own company’s best interests.