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In a perfect business world, agreements would be entered into, both sides would benefit and be pleased with the outcome, and no disputes would arise. But in the real business world, delays happen, financial problems can crop up, and other unexpected events can occur to hinder or even prevent a successful contract from being carried out. Always be aware of the legal concept of “breach of contract,” and your options should such a breach occur.

A business contract creates certain obligations that are to be fulfilled by the people or companies who entered into the agreement.  In the eyes of the law, a party’s failure to fulfill an end of the bargain under a contract is known as a “breach” of the contract. Depending on the specifics of the contract, a breach can occur when a party fails to perform on time, does not perform in accordance with the terms of the agreement, or does not perform at all.

To illustrate how a breach of contract might happen in the real world, assume that Company A contracts with Company B for the purchase of glassware, for delivery by the following Monday evening. If Company B delivers the glassware to Company A on the following Tuesday morning, such a breach of the contract would likely be deemed immaterial. However, assume now that the contract stated clearly and explicitly that “time is of the essence” and the glassware MUST be delivered on Monday. If Company B delivers after Monday, its breach of contract would likely be deemed “material,” and Company A would be able to get damages because of the delay.

When a breach of contract happens (or when a breach is alleged), one or both of the parties may wish to have the contract enforced on its terms, or may try to recover for any financial harm caused by the alleged breach.

If a dispute over a contract arises and informal attempts at resolution fail, the most common method used to resolve contract disputes and enforce contracts is through lawsuits and the court system. If the amount at issue is below a certain dollar figure, the parties may be able to use “small claims” court to resolve the issue.

No matter what avenue is chosen to remedy a breach of contract, the non-breaching party will most likely be entitled to some kind of remedy under the law. Remedies include damages or payments made to one party by the other party, specific performance, or cancellations and restitutions.

Having an experienced advisor when it comes to a breach of contract who is consistently on your side can make the difference in the outcome.