As a business manager, you expect your vendors and customers to fulfill their end of the contracts that you make with them. If a supplier doesn’t deliver the materials that you were expecting, or a customer doesn’t pay for their order, your business suffers. When someone does not fulfill their contract requirements, that is a breach of contract.

A breach of contract can be either minor or material:

  • Minor Breach of Contract: This type of breach occurs when one of the parties fails to perform a small part of the contract, but does perform the majority of the contract.
  • Material Breach of Contract: This is a serious breach, in which one of the parties does not fulfill all or most of their major obligations under the contract. An example would be purchasing $10,000 of raw materials from a vendor and the vendor failing to deliver the goods on time.
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Additionally, it can be anticipatory or actual:

  • Anticipatory Breach of Contract: This occurs when the other party notifies you ahead of time that they will not be fulfilling their end of the contract. They may do this so that you can develop an alternate plan to mitigate the amount of damage that the breach causes. Using the example above, an anticipatory breach would be a vendor calling ahead of time to inform you that they are unable to deliver the raw materials that you ordered on time.
  • Actual Breach of Contract: This is when a party does not fulfill the contract and it can no longer be completed. An example of this is a vendor not showing up to deliver the raw materials that you purchased and not telling you ahead of time that they were unable or unwilling to fulfill the contract.
  • If someone does not fulfill their contract, you can take legal action them. The first step is to contact an attorney who specializes in business law. The attorney will review your contract to ensure that it is valid. If it is, you are able to seek damages to compensate you for their actions. Depending on the specifics of the case, you may be eligible to receive damages based on the value of the contract as well as special damages. For example, let’s say you paid for a vendor to deliver $10,000 of raw materials and they did not deliver the materials on time. As a result of this, you were unable to manufacture your products and sell them for an event, resulting in $20,000 of business losses. You could potentially recover the $10,000 you paid for the materials as well as the $20,000 of business losses. The specific amount you are eligible to recover is highly situation-dependent.

    If you have a vendor or customer that is in breach of contract, contact Rader Law Group for a free case consultation to learn your legal options to recover your damages.

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