What Business Owners Need to Know About Breaches of Contract
Business owners of any size can be affected by breaches of contract, so it’s important to be prepared. While most agreements are fulfilled in a positive and collaborative manner, it’s not uncommon for issues to arise during the course of a contract. From small businesses to large corporations, breaches of contract can have major implications for those involved.
Common Types of Breaches
Breaches of contract vary based on the severity of the violation and how it affects all parties to the agreement. These can include:
- Partial or minor breach – A party to the contract fulfills the majority of their obligations but breaches one aspect of the contract
- Total or material breach – A party to the contract violates the agreement by failing to perform their contractual obligations
- Fundamental breach – A party violates the contract in such a way that there is no way for the other party to hold up their end of the contract
- Anticipatory breach – A party has a reasonable belief that the other party is not going to fulfill their contractual obligations
Breach of Contract Remedies
It’s important to note that remedies vary based on the specific circumstances of the case, but these are the various types of resolutions related to breaches of contract.
- Compensatory damages: A financial remedy based on monetary damages or loss
- Punitive damages: Designed as a punishment for the party who committed wrongdoing, this goes above and beyond any financial award related to monetary losses
- Consequential damages: These may be awarded if an individual suffers tangential damages related to the breach of contract
- Specific performance: This requires the party who breached the contract to fulfill their contractual obligations
- Liquidated damages: These are often outlined in the contract and vary based on the terms of the agreement
Steps to Mitigate Breach of Contract Risks
While it’s impossible to predict or completely eliminate the possibility of contract issues, business owners can take steps to protect themselves and their businesses against future issues.
Have an attorney review your agreements
While it may be tempting to save money and create your own agreements or use templates, having a lawyer review and provide feedback on your contracts can help you if a problem pops up down the line. Being proactive now can greatly benefit you later.
Outline clear expectations
If everyone is on the same page going into the contract, that will hopefully alleviate any confusion during the course of the agreement. By setting clear expectations and deadlines, you can ensure that all parties stay on track.
Perform adequate due diligence
Before entering into a contract, do some due diligence and research on who you will be working with. This can help unearth potential risks or roadblocks that you may not have been aware of before.
If you have questions about a business agreement or possible breach of contract, contact our team. We have extensive experience managing these types of cases and are here to help.
The information contained herein is for general purposes only and does not constitute legal advice.
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