Whether you are a small business owner or run a major corporation, contracts may be a significant part of your daily business. When you enter into a contract with another party, both parties agree to certain terms detailed in the document. When one party breaks their end of the agreement, however, it could have a major impact on your business.
A breach of contract occurs when one party violates a condition or term of a binding agreement and can involve a wide range of issues, according to openstax. Not only is it important to know how to protect yourself from a breach of contract, but what to do if one should occur.
How to make sure a contract is valid?
When entering into a contractual agreement with another party, there are a few essential components to check. According to the Make sure the contract contains the following:
- Clear details on the terms and conditions
- Both parties sign and agree to the terms and conditions
- Deadlines, timelines or amounts involved
- Legally validity
A breach of contract can affect your business and your bottom line. You may lose money, products or clientele as a result.
What are the types of contract breaches?
There are three major forms of breaches, including minor, material and immaterial. A minor dispute occurs when either party breaks a small part of the contract. For example, if one party misses a deadline in delivering products or services. A material breach, on the other hand, involves a major part of the contract, leading to significant damages. An immaterial breach occurs when a term of the contract is broken but it does not affect the overall value and still allows both parties to perform. It is important to stay involved throughout the contractual process to ensure all terms are met within the contract.