Two parties create a contract when one offers to perform — or not perform — a valued action or service, and the other party willingly accepts the offer. A breach occurs when one or both parties fail to fulfill their contractual obligations. This post discusses the four types of contract breaches in New York and three ways to resolve the situation.
Types of contract breaches
Contractual disputes are bound to happen. Failed deliveries, missed deadlines and broken commitments are everyday occurrences. Here are the four types of contractual breaches.
A minor breach is when someone doesn’t meet a due date. For example, your daughter has a custom prom dress ordered, and the seamstress doesn’t deliver the dress until the day after the dance. While this may seem like a life-ending tragedy to the teenager, it’s unlikely to end up in court.
Material breaches occur when the delivered service or product differs from the terms of the contract. Perhaps a catering company agreed to provide five bartenders for a wedding reception, and only two arrived. Or, maybe, you ordered a large shipment of wine glasses, and you received plastic cups instead.
Actual and anticipatory
If someone announces their intention not to adhere to the terms of the contract after the due date, this is an actual breach. It is anticipatory when they publicize their plan to breach the agreement before the due date arrives.
Paths to resolution
If the parties involved cannot work things out between themselves, three types of business and commercial law proceedings provide a pathway for finding a resolution.
A mediator is an unbiased, trained individual who works with the parties involved to try and reach a compromise or full restitution. This person listens to both sides of the disagreement and offers a non-binding opinion. Often, this is the first option chosen because it is the least expensive.
Arbitrators are usually lawyers or retired judges. Arbitration occurs outside of a courtroom, but the arbitrator’s judgment is final. It can only happen by mutual consent or if the contract requires it as a means to settle disputes. This option is attractive because it is faster and cheaper than filing a civil lawsuit.
A breach of contract is not usually a criminal offense unless some form of fraud is involved in the transaction. More often than not, the judge orders the wronged party to receive whatever the contract promised. No punitive damages, like pain and suffering, are awarded in breach of contract cases.
New York law provides for the enforcement of verbal and written agreements. Avoid legal complications and follow through on your commitments.