Contracts are part of the foundation of every business. From employment contracts to vendor transaction contracts, no business can operate without them. Because of this, a breach of contract can have devastating consequences for a business. When a breach does occur, parties often unintentionally waive their rights, or fail to take proper steps to preserve their claims for damages. To best protect yourself and your business, you need to understand what to do after a breach of contract.
When Does A Breach Occur?
Under Texas law, there are four elements of a breach of contract claim: 1) the existence of a valid contract; 2) the attempt by the plaintiff to abide by the contract; 3) the breach by the defendant; and 4) damages sustained by the plaintiff as a result of that breach.
Material vs. Non-Material Breaches
The first step after a breach of contract is to determine whether or not the breach is material or non-material. A material breach of contract occurs when one party fails to perform a major part of a contract. This type of breach is substantial, and either prevents the rest of the duties outlined in the contract from being completed or defeats the purpose of the contact. A non-material breach of contract occurs when one party fails to complete a smaller part of a contract. In these types of breaches, the duties outlined in the contract can still be fulfilled.
Determining The Type of Breach
When determining whether or not a breach of contract was material, consider these five factors:
- The extent to which the non-breaching party will suffer from the breach
- The extend to which the non-breaching party can be compensated for losses caused by the breach
- The extent to which the breaching party will suffer forfeiture
- The likelihood the breaching party will remedy the breach
- Whether or not the behavior of the breaching party illustrates the standards of good faith and fair dealing
Whether a breach is material or non-material is incredibly important. In a non-material breach, the non-breaching party is still expected to uphold their end of the contract. However, in a material breach, the non-breaching party is under no legal obligation to adhere to the terms of the contract.
Don’t Wait To Contact A Lawyer
Determining if a breach of contract has occurred and what type of breach it is will require the eyes of an experienced breach of contract of attorney. If you suspect a breach has occurred, don’t wait to contact a lawyer. At Walston Bowlin, we work quickly and swiftly to protect your business interests. We offer creative fee arrangements to best serve your needs. Contact us today to discuss your claim.