Three types of breach of contract

Businesses in Texas rely on others to make their business successful. They need customers and clients, but they also need other companies for supplies or services to be able to provide their own products and services. When interacting with these other companies and customers it is important that businesses have well-written contracts that are signed by both parties.

Contracts are needed to ensure that everyone understands the scope of their responsibilities and to ensure that those responsibilities are fulfilled. Unfortunately, for a variety of reasons, sometimes one party does not fulfill its obligations under a contract. This is known as breach of contract.

Types of breaches of contracts

There are three main types of breaches of contract:

• Material breach: This occurs when one party to the contract fails to perform a vital part of the contract. These breaches generally frustrate the entire purpose of the contract and allow the non-breaching party to stop performing their obligations as well.
• Partial breach: This type of breach is less serious and does not frustrate the main purpose of the contract. While damages may result from the breach, both parties should be able to continue to fulfill the main obligations while the breach is remedied.
• Anticipatory breach: This type of breach comes about when one party to the contract stops performing its obligations due to something the other party did or said that indicated that it would no longer hold up its side of the agreement. In other words, if Company A indicates to Company B that it will no longer abide by the contract, Company A may be able to breach the contract in anticipation of Company B’s actions.

While some breaches are more serious than others, all breaches can be costly for businesses in Texas. There are various remedies available for the non-breaching parties. The type of remedies depend on the type of breach and the amount of damages. These can be complicated matters though and generally are very fact-specific. Experienced attorneys understand how breaches of contracts affect businesses and may be a useful resource.