Breach of Contract — A Guide for Business Owners

Running a business presents an avenue for two or more parties to enter into a contract. Notably, business contracts are binding and must be treated with utmost diligence. However, contract breaches are common in commerce, and while some are intentional, others are innocent mistakes. It is the reason your business needs a commercial lawyer who understands contract law. A commercial lawyer protects your business against the following types of contract breaches.  

Material Breach

When you enter into a contract with another business, and the agreement lays down each party's obligations, you must meet your part fully. For instance, if you commit to supply fresh organic produce to local grocery stores, you should not fill crates with genetically modified products. While you can get away with the mistake a couple of times, a keen customer will notice the discrepancy and sue you for material breach of contract. However, a commercial lawyer will read an agreement and advise you accordingly. On the other hand, if you are accused of a material breach of contract, a lawyer will argue to quash the accusations or reduce the expected liability.  

Minor Breach

This type of contract breach is also referred to as a partial breach. It refers to instances where involved parties received their deliverables, but one failed to fulfil part of their obligation. For example, if you are supposed to supply fresh produce from local farms only, you would be in breach of contract for sourcing part of the produce from other farms. Your partners can sue you and claim damages for loss of profit. However, lawyers understand that an aggrieved party can only sue for a minor breach of contract by proving financial loss. Therefore, your lawyer can argue that the aggrieved party did not incur financial consequences.  

Anticipatory Breach

Unbeknownst to most business owners, a breach of contract does not need to happen for the aggrieved party to pursue a legal remedy. Even if the other party contemplates breaching a contract, you can sue them for perceived intentions. Therefore, an aggrieved party must prove that the accused indicated (verbally or written) that they would not fulfil their contractual obligations. For example, one of your customers might send you an email indicating that they will make a partial payment because you delivered late. In this case, you can sue your contractual partner for anticipatory breach of contract so that they can honour their obligations in an agreement.

Contact a lawyer to learn more about commercial law.

About Me

Human Resources: How to Hire and Fire

Hello, my name is James. I own a medium-sized company. When I first started out, it was just me and my tools. However, as the company became more successful, I had to start hiring other people. At first, most of the people who came to work for me were old friends, so I didn't worry about contracts. We just shook hands and had a beer. This worked fine until I had a dispute over pay with one of my employees. I got in touch with an HR consultant who helped me to put the correct HR procedures in place to protect myself and my business. I decided to start this blog to advise others about how to hire and fire staff.

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