A contract is a legally enforceable agreement between two parties. Each side promises to uphold a certain duty or pay a certain amount according to the contract agreement.
One party’s failure to fulfill any of its contractual obligations is considered a “breach” of the contract. A breach can occur if a party fails to perform within the time frame agreed upon in the contract, does not perform in accordance with the contract terms, or fails to perform at all. If one party fails to adhere to any terms of the contract, the other party is entitled to legal remedies for the breach.
The following are the four types of breaches of contract:
- Actual breach – Actual breaches occur when one party fails to fulfill their obligations on the date performance is due or when one party performs their obligation and the other party refuses to do the work.
- Anticipatory breach – Anticipatory breaches happen when a party refuses to perform their obligations under contract before the due date of performance. For instance, if one party agrees to sell her vehicle to a buyer in seven days, but then reneges on the fourth day, they’re anticipatorily breaching the contract.
- Material breach – A material breach is a significant breach of contract terms. For instance, a seller refuses to give the buyer the vehicle after the buyer has completed all of the contract terms is a material breach.
- Minor breach – Also known as a partial breach, a minor breach means failure to complete a small, non-essential part of the contract. While—technically—it is considered a breach, the contract can still be completed.
To sue another party for breaching a contract, a valid agreement must exist in the first place. A valid contract requires an offer made by one party that was accepted by another. Each side must have provided something of value, also known as “consideration,” to demonstrate the seriousness of the deal. Lastly, the other party must also have had the legal right to enter into a contract.
In most cases, you must typically wait until a breach has been committed prior to filing a lawsuit. Furthermore, you must also prove the other party was the one who broke the contract and that you notified the party of the breach.
When to Hire a Lawyer
When it comes to filing a lawsuit against the breaching party, it is wise to attempt to reach out to them by telephone call, e-mail, or letter. Inform the other party that you are willing to negotiate the terms of the contract.
If that fails, then it is time to hire an experienced business litigation attorney to send a demand letter to the breaching party. If the breaching party ignores your lawyer’s letter, then it is time to sue.