Business-to-business relations are typically founded upon contracts. A contract protects the rights of both parties and ensures that obligations are followed through. Generally, most parties honor their contractual obligations, but this isn’t always the case.
A contract breach can be damaging to your business. There are four common types of contract breaches, as outlined below:
Minor breaches
As the name suggests, minor breaches aren’t usually very serious and they typically relate to only part of the contract. For example, a business may receive the goods that they ordered, but they arrived a day later than previously agreed. Usually, such breaches are easily remedied through a simple apology or a small amount of compensation for any losses.
Anticipatory breaches
Anticipatory breaches occur when one party informs the other that they will not be able to meet their contractual obligations. For example, in the above scenario, if the delivering business informs the other that they will be a day late, this is an anticipatory breach.
If the anticipatory breach relates to a one-day delay, then this is unlikely to pose too big a problem. However, if the delay will be one week or more, then the impacted party may suffer significant losses as a result.
Actual and material breaches
Actual and material breaches are the most serious type of breach. They typically occur when one party has received no benefit from the originally agreed-upon contract. For instance, goods that were supposed to be delivered were never delivered. In such instances, the affected party may cancel the contract all together and sue for damages.
Contract breaches can be nuanced. To find the most appropriate remedy, it will benefit you to seek further legal guidance.
