When someone signs a contract with your business, you and they are both legally obligated to adhere to that contract. Failing to do so is a breach of that obligation and can lead to legal action.
Now, there are several common reasons a contract can be broken — and they can happen on either end. Understanding more about the causes of a contract breach can help you both avoid them on your end and know how to react when they happen on someone else’s end.
How a breach can happen
Exactly how a contract is broken depends on the specifics of that contract, of course, but the following are a few general ways that these breaches happen:
- Failing to deliver a product at all
- Delivering the wrong product
- Fraudulently representing a product or service to get the contract
- Failing to deliver the terms of the contract on time — even when the products or services are rendered
Now, there are cases where misunderstandings can lead to a breach. It’s not always malicious. For instance, a company may agree to deliver a product on the first of the month. However, the owner of that company thinks the contract said to make the first delivery any time that month. If their delivery shows up two weeks late, you’re irate because they didn’t honor the contract. The other business owner is confused, though, because they thought they perfectly adhered to that contract.
When misunderstandings or intentional actions lead to a breach of contract with your business, what you can be sure of is that you need to understand your legal options. This could have a massive impact on your company, and you need to know what steps to take.