Someone in your team comes and tells you there has been a contract breach. Maybe it’s your company accused of making it, or perhaps someone else has breached the contract you had with them. To understand how best to react, you first need to know a little more about what happened.
One of the key things you need to know is what type of breach you are talking about. There are two different ways of looking at this.
Actual vs. anticipatory breaches
Has the breach already happened? If so, this would be an actual breach. Or are you looking at something that is about to happen, that someone has warned of in advance? If so, that would count as an anticipatory breach.
For example, you were meant to deliver to a client yesterday, but the delivery did not happen. That’s an actual breach. If one of your team members is telling you that you don’t have the ability to make your scheduled delivery tomorrow or next week, then that would be an anticipatory breach.
Minor vs. material breaches
How big of an issue is the breach to the affected party or the deal? This depends on how much of the contract is not being met and what harm the breach causes. If a supplier delivers you the agreed-upon goods one day later than they were meant to, but you managed to cover their lateness by finding the supplies elsewhere, then it’s probably a minor breach. If they do not deliver at all or deliver something entirely different from what you ordered, causing you to fail your customers or temporarily suspend your operations, then that is probably a major breach.
Working out which two of the four categories a contract breach falls into is not always straightforward, as one side’s view of things may be very different from the other’s. Likewise, working out an acceptable remedy can also be challenging. Learning more about how a court would see the situation is often wise before doing anything.