Contracts are routine matters when it comes to running a smooth business. These legal documents can outline what a party can and can’t do and what’s expected from them. Without a contract, a business could have its reputation ruined, expose a business to unnecessary lawsuits or cause someone to be injured.
Despite contracts being legally binding, a party could breach their contract, putting a business in an awkward position – depending on the type of breach that happened. Here are two possibilities:
A material breach of contract
A contract breach that is considered material may be caused by a party who doesn’t complete their obligations in a way that clearly disadvantages or harms the other party. In other words, a party may not have followed the instructions on a contract, provided something other than what the contract specifies or failed to complete their work on time.
For example, if a contract explicitly says that a shipment of stone tiles is to be made by a certain date and they send inferior products that crack just after they’re put in place, that could cause your construction company a ton of money and reputational damage.
An immaterial breach of contract
An immaterial breach of contract is a minor failure to live up to the terms of a deal – one that causes no significant damage to the other party.
For example, if the stone tiles were fine but arrived just a day late because of shipping delays that were out of your supplier’s control, that’s likely to be an immaterial breach, since it isn’t likely to significantly delay your construction project or damage your company’s reputation.
If you believe that a party breached a contract, then you may need to contact legal assistance that can provide you with more information about how to recover from any damages or losses.