When an employee or customer breaks their contract with you, where do you stand, and what can you do next? Unfortunately, breach of contract isn’t too uncommon. In fact, especially for small businesses, breach of contract can happy rather often. So, if someone does not fulfill the duties he or she agreed to perform, what can you do to protect yourself?
First off, let’s explain what a breach of contract is. A breach of contract occurs when someone you had a lawful contract with broke said contract without lawful reason. This includes, but is not limited to, contracts between an employer and employee or a company and customer. A breach of contract can be harmful to anyone, but typically individuals and small businesses suffer the most. Any breach of contract can result in a loss of money, time, and business.
There are a few different types of breaches, some of which may be treated more seriously than others, especially from a legal standpoint. However, if you have suffered a breach, it is important that you understand what type of contract break you are dealing with.
The standard types of contract breaches include:
- Material Breach: If an individual or company fails to perform the contractual duties they agreed to, they committed a material breach. This is one of the most serious forms of a breach of contract and can lead the wronged party to seek compensation for damages in court. For example, if a contractor performed her job, but the party that hired her did not pay her, they committed a material breach of contract.
- Fundamental Breach: A fundamental breach is a bit more complicated as it typically involves the break of a contract or the enforcement of the contract. If for example, someone does not fulfill their end of the contract, the wronged party may then stop their portion of the contract and sue for damages.
- Anticipatory Breach: In the event that it is clear the contract cannot possibly be upheld, one party may terminate the contract on the grounds that the negligent party will not be able to uphold their end of the bargain. For example, if someone agrees to perform a task by a specific date, and they have not started the day before, the other party may attempt to collect monetary damage for anticipatory breach of contract.
- Minor Breach: Also called a partial breach, a minor breach occurs when the job agreed in the contract was not completely fulfilled. If for example, one party did the job they said they would do, but they did it incorrectly, it could be considered a minor breach. The wronged party may then have the option to sue for monetary damages or to legally force the other party to correct their mistakes.
After determining which type of breach of contract you’ve experienced, you have to decide how you would like to proceed. If you have a case, you may take the breach to court in order to seek compensation for relevant damages. Damages may be monetary, or they could include a court order for the guilty individual to perform a certain task, typically to correct a mistake they made or to perform the job they were contractually promised to. The court may also allow a reformation, where the contract can be rewritten to satisfy both parties. Or, in some circumstances the court may instead grant a recission, effectively cancelling the contract.
When seeking damages, the individual or company may pursue compensation for the costs or losses suffered. This may also include potential losses, liquidation damages, punitive damages, and legal fees.
If you are dealing with a breach of contract, it is important to act fast in order to protect yourself and your business. Our employment lawyers have been representing employment law cases since 1994, and we have the skills and experience necessary to defend your rights.
Contact Shellist Lazarz Slobin LLP to discuss your breach of contract case, today!