Many successful businesses wouldn’t be where they are today without well-crafted contracts. A contract is a legally binding agreement that ensures cooperative parties uphold their end of a bargain. When parties fail to keep their end of a deal, then they may be breaching a contract.
A contract breach can severely hurt a business. The following are two kinds of contract breaches you may face:
Immaterial contract breach
An immaterial or minor contract breach means that a service or product was delivered as specified in a contract, yet it wasn’t entirely fulfilled. A minor contract breach can happen in the following examples:
- A delivery was meant to arrive on a specified date, but, following a delay, the delivery arrived one day late – but not too late to be used as intended.
- A service was provided to renovate a room, which was meant to include painted walls, but the walls were left unpainted.
- A delivery was meant to provide a business with twelve crates of food, but, upon delivery, one crate was missing.
Essentially, a minor contract breach means that something was left missing or undone from the terms of an agreement, but the business is unlikely to be seriously damaged. These kinds of breaches are unlikely to result in any major conflict or litigation.
Material contract breach
A material contract breach occurs when a service or product was fulfilled to the terms of the agreement, but the product or service provided was different from what was specified. A material breach of contract may appear in the following ways:
- A delivery of shorts ended up being a delivery of winter coats.
- A room meant to be painted pink was instead painted dark green.
Unlike a minor contract breach, a material contract breach often involves a product or service being fulfilled, but the wrong service or product was provided, which damages the non-breaching party. In these situations, the aggrieved party has the right to expect the problem to be fixed or ask for damages.
Non-breaching parties who believe a contract breach damaged their business may need to understand their legal rights.