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The Three Different Forms of Contract Breaches

The Three Different Forms of Contract Breaches

Take a quick look into the world of business and you will immediately come across contracts of all types, as far as the eye can see. If you are running a company or corporation, you likely already know how important contracts are to your success and the day-to-day operations of your business. Even as an individual consumer, business contracts are everywhere, from warranties assigned to products to agreements between you and a service provider. Despite how numerous they are and how much they can control, business contracts only really become a concern once one of them is breached.

A breach of contract occurs after one party named in a contract does not or will not fulfil their responsibilities as outlined in the contract. While there may be countless variations or purposes of contracts, there remain three primary forms of contract breaches. If you are dealing with a breach of contract or a contract dispute, being able to identify the type of breach can help strengthen your argument.

The three primary breach of contract types are:

  1. Material: Also called a total breach, a material breach occurs when one party fails to uphold their responsibilities so blatantly that the purpose of the original contract is essentially nullified.
  2. Fundamental: The non-breaching party is so dramatically affected by the breach of contract, they can both void the contract and pursue damages for the other party’s wrongdoing.
  3. Anticipatory: If one party clearly states that they will eventually fail to fulfil their responsibilities, or if they have provided enough evidence for another party to reasonably come to this conclusion, it is known as an anticipatory breach. The party that will not breach the contract can sue for damages and terminate the contract before the actual breach occurs in order to protect their investments and reduce their losses.

How to Prevent & React to Breaches of Contract

A great deal of running a company is taking the imitative and anticipating problems before they occur. This same principle applies to breaches of contract. By drafting a contract and reviewing it with a professional business lawyer, before it becomes official, you can significantly reduce your chances of ever running into a complication like a breach. Clear language in a contract sets clear expectations and clearly outlines how those expectations should be met.

You cannot control the actions and behaviors of your business partners, though. Without warning, another party in a contract may decide to break it, either due to necessity, maliciousness, or any other reason. In such a situation, a business lawyer once again can become your saving grace.

At Nisar & Mason, our New York business law attorneys can provide general counsel services so you can hopefully avoid a courtroom battle after a breach of contract, as well as commercial litigation services if you cannot. With 20+ years of collective legal experience, our law firm should be your go-to team for all legal matters concerning your business, company, or corporation. Schedule your case evaluation today to begin.

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