Contracts play a vital role in business transactions. They legally bind parties to certain duties, liabilities and responsibilities. Irrespective of the size of your business, the contracts you enter into with clients, partners and vendors are what will help your business thrive and survive. Most contracts, however, are lengthy and complex, and riddled with legalese that is hard to interpret, which frequently results in contract disputes.
Breach of Contract
Not all contract disputes result from a lack of understanding of contractual terms. In fact, often times, one party does not perform their part of the contract as stipulated, or simply refuses to fulfill the contractual promise altogether. This failure to perform is considered a breach of the contract, and can happen in one of two ways:
- Material Breach– A material breach of contract occurs when one party fails to perform a major part of the contract, which prevents the contract from being completed and deprives the non-breaching party of a substantial benefit. If a material breach of contract occurs, the non-breaching party is no longer obligated to perform their part of the contract, and can sue for damages instead. Some examples of material breach of contract include failure to deliver goods within a time frame and failure to maintain prescribed standards of goods.
- Minor (or non-material) Breach– A non-material breach occurs where one party fails to perform a minor part or an ancillary term of the contract. In this type of breach, the functionality of the agreement remains intact and both parties are still obligated to fulfill the contract, but the non-breaching party can still also sue for damages. For example, if a home owner contracts for black wires and the contractor installs red wires instead that perform just as well, this would be a non-material breach of contract since the fundamental purpose of the contract was still fulfilled.
Common Types of Contract Disputes
While there are numerous disputes that can arise out of contracts, some of the more common types involve:
- Non-Disclosure Agreements (NDA’s)
- Non-Compete Agreements (NCA’s)
- Business contracts for services (which specify deadlines and deliverables)
- Lease agreements
- Offer and acceptance disputes
Resolving Contract Disputes
Contract disputes can be resolved in one of two ways: legally or equitably.
Legal remedies grant relief to aggrieved parties and are typically compensatory in nature. They primarily seek to restore the aggrieved party’s position prior to the breach of contract. Common legal remedies include:
- Compensatory damages
- Punitive damages
- Lost profits
- Lost wages
Equitable remedies, on the other hand, grant relief when legal remedies and/or monetary compensation cannot adequately rectify the breach. Equitable remedies are:
- Specific performance
There are other options available to aggrieved parties besides these common remedies. For example, if the other party is amenable, you can also try negotiating changes to the contract through mediation, which will avoid a long and drawn out court battle, as well as unnecessary legal expenses.
It’s important to discuss the merits of your case with an attorney who is well-versed in handling contract disputes, so that you know what options are at your disposal and can take proper action to mitigate your losses.
Contract Disputes Attorney Todd M. Kurland Can Help
Whether it’s a total breach of contract, a dispute over vague contractual terms or an oral agreement in a business transaction that was never formally recorded, Todd M. Kurland is a contract disputes attorney who can help you navigate through the complicated maze of business law. And with decades of experience, our team has the skillset and expertise to get you the most favorable outcome for your case. Contact us today at (561) 693-4514 to schedule your free consultation.