Contracts are legally binding documents that outline the rights and responsibilities of two or more parties. While the majority of contracts are completed without issue, there are times when one party breaches the agreement.

Contract breaches can range from minor to severe, and they can have different consequences depending on the nature of the breach. In this guide, we’ll explore some common contract breaches that don’t cause harm and provide tips for handling them.

What is a Contract Breach?

A contract breach occurs when one party fails to fulfill their contractual obligations. A breach can come in many forms, including missing a deadline, failing to deliver a product, or providing subpar work.

When a breach occurs, the party that is harmed may pursue legal action to seek damages or specific performance. Specific performance is a remedy where the court orders the breaching party to fulfill their obligations as outlined in the contract.

Minor Breaches

Not all contract breaches are created equal. In some cases, a breach may be minor and not cause any significant harm.

For example, if a contractor is hired to paint a room in a certain color but accidentally uses a slightly different shade, this may be considered a minor breach. In this case, the damages may be negligible, and it may be more trouble than it’s worth to pursue legal action. Instead, the parties may be able to resolve the issue through negotiation or by amending the contract.

Material Breaches

Material breaches are more severe than minor breaches and may result in significant harm to the non-breaching party. For example, if a company fails to deliver a product by a specified date, this may be considered a material breach.

In this case, the non-breaching party may lose money or suffer other damages, such as reputational harm. Material breaches often require legal action to resolve, as the non-breaching party may need to seek damages or specific performance.

Breaches of Implied Terms

Contracts can include both express and implied terms. Express terms are those that are explicitly stated in the contract, while implied terms are those that are necessary for the contract to be effective and complete.

When a party breaches an implied term, it can be difficult to determine what action should be taken. For example, if a company hires an employee for a certain role, there is an implied term that the employee will carry out their duties with reasonable care and skill. If the employee fails to do so, this may be considered a breach of an implied term.

In this case, the non-breaching party may need to seek legal advice to determine what action should be taken.

Breach of Non-Fundamental Terms

Contracts often include both fundamental and non-fundamental terms. Fundamental terms are those that are essential to the contract, while non-fundamental terms are those that may be important but are not essential.

When a party breaches a non-fundamental term, the non-breaching party may have different options depending on the nature of the breach. For example, if a company hires a contractor to repair a roof and the contractor fails to use the exact brand of materials specified in the contract, this may be considered a breach of a non-fundamental term.

In this case, the non-breaching party may pursue legal action or negotiate a settlement.

Solutions for Contract Breaches

When a contract breach occurs, it’s important to take action to protect your interests. Here are some solutions for contract breaches:.

Negotiation

In some cases, the parties may be able to resolve the issue through negotiation. For example, if a contractor fails to complete a project by a specified deadline, the parties may negotiate a new deadline or a reduced fee.

Mediation/Arbitration

If negotiation is unsuccessful, the parties may consider mediation or arbitration. Mediation involves a third-party mediator who helps the parties negotiate a settlement.

Arbitration is similar to a court hearing but is less formal and is typically faster. The arbitrator makes a binding decision that the parties must abide by.

Legal Action

If all else fails, the non-breaching party may need to pursue legal action. This may involve seeking damages or specific performance. It’s important to consult with a lawyer to determine the best course of action.

Conclusion

Contract breaches can cause significant harm to one or more parties. While not all breaches require legal action, it’s important to take action to protect your interests.

By understanding the different types of contract breaches and the solutions available, you can take proactive steps to mitigate the impact of a breach and preserve the integrity of your contract.