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Contracts are a critical element for business operations and are legally binding should any issue arise. One common contract dispute many businesses face is a breach of contract. A breach of contract is when a binding agreement is not honored by one or more of the parties when obligations are not performed in the manner required by the contract. For a breach of contract claim to arise, there must be a valid contract between two parties, with each party having an obligation to the other which is breached. A breach of contract can also be alleged when an agreement is implied but not expressly stated.
There are three types of breach of contract that a business may experience.
Material Breach
A material breach of contract is a failure to perform such that it goes to the heart of the agreement and defeats the purpose of the contract. For example, if a party hired to build a house instead builds a shack, that would be a material breach because it would not meet the buyer's needs. In this type of breach, the non-breaching party may terminate the contract and sue for damages.
Partial Breach
A partial breach of contract is a failure to perform that does not go to the heart of the agreement and does not defeat its purpose. For example, if a plumber arrives an hour late to fix a leaky pipe, that would be a partial breach. The non-breaching party can sue for damages but cannot terminate the contract.
Anticipatory Breach
An anticipatory breach of contract is a statement or action by one party indicating that it does not intend to perform its obligations. For example, if a party to a contract for the sale of goods says it will not ship the goods, that would be an anticipatory breach. The non-breaching party can sue for damages or terminate the contract.
How a Breach of Contract Impacts a Business
Breach of contract claims are extremely common in business disputes, particularly in cases where one party believes that it has been mistreated or has not received what it was promised. If one party fails to live up to its end of the bargain, the other party may sue for breach of contract.
If a party believes they have a breach of contract lawsuit, they must be able to prove that:
- a valid contract was signed by both parties;
- he or she performed their obligations under the contract;
- the breaching party failed to meet their obligations; and,
- as a result of the breach, the plaintiff suffered damages.
San Diego Breach of Contract Attorneys
If you were harmed by another party's failure to live up to its contractual obligations, you might be able to recover damages by filing a breach of contract lawsuit. The experienced business attorneys at Purdy & Bailey, LLP can help you determine whether you have a valid claim and can represent you in court if necessary.
See what our team can do for your business by contacting us online or by phone. (858) 360-7080