Brown Borkowski & Morrow


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What is a breach of contract?

As a small business owner in the Detroit metro area, you will need to work with many different parties to help establish your company. When working with vendors, it is essential to have an iron-clad contract to prevent costly delays and disputes. Whether procuring goods or services from vendors or rending services and products, you need a legal agreement/contract in place to outline the exact expectations of each party and how to handle any business disputes or issues that arise when you or one of your vendors cannot uphold your end of the deal. 

Breaches happen all the time in the business world. No matter the cause for dispute, it is essential for you to learn about the diverse ways contract breaches can occur, so you can take the proper steps to resolve them and possibly avoid litigation. A contract breach can happen in four ways: material, immaterial (minor), actuarial and anticipatory. The most common types of business contract disputes involve material and minor breaches. 

Immaterial breaches occur when someone does not deliver the quality of products or services outlined in the contract. Minor violations can also occur when goods and services are incomplete or delivered in an untimely manner. 

Material breaches occur when a party or entity delivers services or goods that drastically differ from expectations outlined in the contract. 

Anticipatory breaches arise when someone makes it known that she or he plans to honor the terms of the contract, but that person does not deliver the goods or services until after the passing of the deadline. 

Actual breaches happen when a contracted person or entity fails to abide by the contracted deadline for the delivery of goods or services. Actual breaches also occur when the person/entity in breach does not deliver or provide the full amount of goods or services as detailed in the contract. 

There are many ways to resolve contract breaches. Litigation may seem like the fast and sure way to settle contract breaches, but it is often best left as a last resort. Arbitration and formal meetings are alternative tactics business owners use to resolve their disagreements and contract breaches.