In the world of business, partnerships are a common occurrence. Small-to-medium sized businesses often rely on these collaborations to grow and thrive. But along with the many benefits of a partnership comes the responsibility of upholding fiduciary duties.
Breach of Contract
You enter into a contract with the intention of fulfilling your end of the bargain, and with the expectation that the other person will do the same. Right? So, what happens when they don’t?
In this case, what has occurred is called a breach of contract. Legally, this is defined as a party’s failure to do what they promised to do. This can come in a variety of forms, with some examples being:
A supplier not delivering raw materials to a manufacturer on time
A borrower not paying back the rest of a loan they owe to a lender
A performer not showing up for rehearsals or even the performance itself (Aretha Franklin did this a lot)
All of these examples can fall into various categories of breaches, with some being more serious than others. These include:
Minor breaches – “The materials I received were the wrong color, but they worked so I used them.”
Material breaches – “The materials didn’t get here on time, and I missed deadlines for all my biggest orders because of it.”
Anticipatory breaches – “I know you’re going out of town this weekend and won’t be able to take care of my house, as we agreed you would.”
Actual breaches – “We agreed you would mow my lawn this weekend, but I came home and you hadn’t.”
Usually, contracts will specify what happens in the case of a breach. If the other party doesn’t pay you back on time or doesn’t send you the right product, the contract could have terms that specify how much money they have to pay you, or what corrective action they have to take and within what time frame they have to do it.
Always consult an attorney regarding any issues or questions you may have regarding forming a contract or a possible breach of contract.
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