Most of us engage in contracts every day, perhaps without even realizing it. Even something as simple as buying a product from a grocery store involves a contractual agreement. The reason we don’t necessarily notice all of these contracts is that the obligations are usually honored. You buy a specific product for a set price and it does the job as intended.
It is not until something goes wrong (the contract is breached) that we tend to notice the contract. In business especially, a contractual breach can have serious consequences. Companies may need to litigate to find suitable remedies. However, this largely depends on the nature of the breach.
What are the most common types of contract breaches?
Minor breaches
As the name suggests, minor contract breaches are usually relatively insignificant. They may equate to something like an order being a day delayed, or one item missing from a batch of products. These issues can often be resolved with an apology. The sender of the goods may send out the missing item and promise that the next delivery will go according to plan.
Anticipatory breaches
Occasionally, parties are given advanced warning that a contract will be breached. Using the prior scenario, a vendor may send out an email warning the receiver that they have run out of stock, so one item may be missing from this order.
The remedy for this type of contractual breach will largely depend on the unique circumstances of the breach. If it is minor in nature, then a resolution may be reached without court intervention. Nonetheless, contractual breaches are not always minor.
Actual and material breaches
Actual and material breaches mean that the fundamental terms of the contract have not been honored. An actual breach occurs when one party simply refuses to perform their contractual duties. A material breach occurs when an action was carried out, but it was fundamentally different from what was agreed upon. For example, the completely wrong product may have been delivered.