When two or more parties sign a contract, they are both obligated to comply with the contract’s terms. Often, contracts are used to outline the scope of an employee’s work and employment with a company. Sometimes, a contract is used to hire an individual to perform a short-term job. In this type of case, the worker is an independent contractor, rather than an employee.
When one or both parties do not comply with a contract’s terms, the noncompliance is known as a breach of contract. A breach of contract can prevent a job from being completed or it can be a setback for one or more of the parties who signed the contract. In some cases, a party experiences financial damages because of the breach, and when this occurs, the breaching party may be liable for the damages.
Not all contract breaches are the same. There are four types of contract breach.
A breach can be anticipatory or actual. An actual breach of contract is exactly what it sounds like – failure on one party’s part to complete his or her contractual obligations. An anticipatory breach occurs when a party knows beforehand that he or she will not be able to fulfill his or her obligations.
A breach of contract can also be minor or material. A minor breach of contract is a breach where one party fails to perform a minor contractual obligation, but ultimately completes the job he or she was contracted to perform. A material breach occurs when the contracted party performs the job as outlined in the contract, but the end result is substantially different from what was expected.
Often, business contracts stipulate that if a breach occurs, the issue is to be handled through arbitration. Arbitration is a type of alternative dispute resolution that keeps a case out of the courtroom. With this different setting comes privacy, but not necessarily confidentiality.
Cases that go through arbitration are heard and ruled upon by the arbitrator, which could be one person or a panel of disinterested parties. Like a judge and jury, the arbitrator considers both parties’ positions and evidence to determine an appropriate, legally binding ruling for the case.
If you think you are likely to breach a contract or you know you will or already have breached the contract, contact an experienced employment lawyer as soon as possible to start preparing your case.
If you are facing a breach of contract or another contract disagreement, speak with an experienced employment lawyer about your rights and legal options before you move forward with the other parties involved in the contract. Contact our team at Valiant Law today to schedule your initial consultation with us, during which we can answer any questions you have and guide you toward the route that is in your best interest.
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