A contract breach can lead to litigation because there can be financial losses for the party that experienced the breach. For instance, a general contractor may have subcontractors under contract, and if they don’t show up and complete their portion of the job, the whole project grinds to a halt.
But there are different types of contract breaches that may take place. Below are four examples of the major categories.
A material breach
This means that the contract specified that you would get one product or service, but you received something else. For instance, a general contractor could order drywall and receive plywood sheeting for a roof.
A minor breach
It’s considered a minor breach when some of the details of the contractor aren’t upheld. For instance, maybe the materials were delivered, but they were a day late. Missing a deadline can still have a financial impact.
An anticipatory breach
This happens when the other party knows that they can’t fulfill the contract. Maybe they said they would deliver materials that they don’t have on hand. They tell you in advance that they’re not going to be able to do it.
An actual breach
An actual breach is just when the other party refuses to uphold the contract. There are a variety of reasons why this happens, but the services or products are simply not rendered even though they’ve been agreed upon and payment may have been made.
If any one of these breaches leads to litigation involving your business, take the time to carefully look into all of your legal options. You must know what steps to take to rectify the situation and minimize the financial impact on your company.
