Not All Business Contracts Are Breached in the Same Way

Breach of contract is recorded in chalk on a blackboardYou couldn’t do business without entering into binding legal contracts. You need assurance from other parties that they will pay for the services or goods that you provide or that they will provide the services or good that you pay them to provide to you. Without a contract, the risk of significant business loss is too big.

Unfortunately, business contracts aren’t always honored. When one party fails to comply with the terms of the contract without a legally justifiable reason then the contract is considered to be “breached.”

This happens more often than you might expect.

Business contract breaches can be complex. There are several different ways in which a breach may occur, and Kentucky law allows your business to recover if other parties do not abide by the terms of the contracts you entered. However, in order to make a fair recovery, you need to know more about how your contract was breached and what steps you need to take to protect your rights.

Common Types of Business Contract Breaches

If you own or work for a Kentucky business, then it is important to be aware of the following types of breach of contract disputes:

Material Breach of Contract

A material breach of contract occurs when an individual or a business fails to do what is required pursuant to the terms of the contract. This failure to perform the duties required by the contract leaves the other party without the substantial benefit of the contract agreement. This is considered a serious breach of contract.

Actual or Fundamental Breach of Contract

A fundamental breach of contract, like a material breach of contract, is considered a serious contract violation. A contract is fundamentally breached when one party fails to comply with a term of the contract and that prevents the other party from fulfilling its own responsibilities under the contract.

Anticipatory Breach of Contract

An anticipatory breach of contract typically occurs when the contract contains a date by which something specific must happen. As that date approaches, it may become clear that the completion date will be impossible because work on the contract has not started or has not progressed to the point that would make completion by the contract date feasible.

Minor Breach of Contract

As the name suggests, a minor breach of contract is less serious than other types of contract violations. A minor breach of contract occurs when there is a partial breach of contract. In other words, there was a term of the contract that was breached, but the most important parts of the contract were completed.

What You Need to Prove in a Breach of Contract Case

As the injured party in a breach of contract case, you will need to prove that:

  • You had entered a valid contract.
  • The defendant breached the contract in one of the ways described above.
  • You suffered damages as a result of the breach of contract.

In any kind of breach of contract case, you should expect that the other party will defend itself by arguing that the contract wasn’t breached or because you committed fraud, that the defendant was under duress or undue influence when signing the contract, or the statute of limitations has expired. It is important to anticipate these defenses so that you can protect your business.

What You Might Recover in a Breach of Contract Case

Depending on the type of breach that occurred, you may be able to pursue the following legal remedies:

  • Financial compensation (also known as damages). This may include compensatory damages for any losses that you’ve suffered and attorney’s fees if allowed by the contract terms or by law.
     
  • Specific performance. This will require the other party to comply with the terms of the contract.
     
  • Rescission. This will cancel the contract and require any money to be returned. The goal is to make it as if the contract was never in existence.
     
  • Reformation. Reformation occurs when there are revisions to the contract in an effort to make it so that all parties can comply with the contract terms and reach the goals set forth in the contract.

You’ve worked too hard to let someone else’s breach of contract harm your business. If another party is not complying with your contract then you need to take action today to protect your rights. You can find out more, without any cost or obligation, by downloading a free copy of our report, The Legal Guide to Business and Contract Disputes, and by contacting us at any time to schedule a meeting with our nationally known business litigation lawyers.