Tips for avoiding a breach of contract

A breach typically happens when one or more parties in a legally-binding contract (written or oral) intentionally or unintentionally fail to live up to the agreement’s terms. Breaches can occur over a wide array of agreed-upon terms and conditions.

Managing contract obligations can be challenging for many California businesses, especially as they grow. Without adequate record-keeping or other safeguards in place, contract breaches can jeopardize relationships between parties and result in financial setbacks.

Types of breaches

Contract breaches are generally considered minor or material:

• Minor breach example: Failing to deliver or receive a product or service by the due date.
• Material breach example: Receiving or providing a different product than what was promised.

Breaches also usually fall under one of two categories:

• Anticipatory: The party in breach of contract notifies the other party in advance they cannot fulfill the terms of the agreement.
• Actual: One party refuses to live up to the agreement’s terms.

Unfortunately, breaches of contract are common. They happen for several reasons, including relying on third parties to deliver goods and services, poor communication between parties, and the inability of businesses to track their obligations.

Steps for avoiding a breach of contract

Contracts are essential for businesses to ensure that employees, suppliers and other parties live up to requirements and promises. Disputes can be costly. That’s why it’s advisable to have experienced lawyers draft or review these agreements. A business law attorney can assess contracts and ensure that they contain these vital elements:

1. The language is clear, accurate and complies with state, federal and municipal laws
2. The agreement outlines expectations, and remedies for breaches
3. The contract is a legally-binding document

Drafting clear legal documents is the best way to protect yourself and your customers. Lawyers specializing in business contracts can protect you from minor and material breaches and, ultimately, help you avoid costly litigation.