Breach of agreement: Overview, definition and example
What is breach of agreement?
A breach of agreement occurs when one party fails to fulfill their obligations under the terms of a contract. This failure can include actions such as not performing services, missing deadlines, failing to make payments, or violating other terms specified in the agreement. Breaches can be classified as material (significant enough to undermine the purpose of the contract) or minor (less critical but still requiring remedy).
When a breach of agreement occurs, the non-breaching party may be entitled to seek remedies such as compensation, contract termination, or enforcement of the agreement.
Why is breach of agreement important?
Understanding breaches of agreement is important because it helps parties protect their rights in the event of non-compliance. Clearly defining expectations, obligations, and remedies in the contract reduces misunderstandings and provides a roadmap for addressing breaches.
For businesses, addressing breaches effectively ensures continuity, minimizes financial losses, and helps maintain professional relationships when possible. Remedies for breaches can also serve as a deterrent, encouraging compliance with the contract’s terms.
Understanding breach of agreement through an example
Imagine a software development company signs a contract to deliver a custom application to a client by a specific date. However, the company fails to meet the deadline, causing the client to miss a critical launch window. This would likely be considered a material breach, as it undermines the purpose of the agreement. The client may choose to terminate the contract and seek damages for the losses incurred.
In another example, a supplier agrees to deliver goods to a retailer every month. If the supplier delivers late by a few days but the retailer still receives the goods in time for sales, this would be considered a minor breach. The retailer could request a remedy, such as a discount, but the contract would likely remain in force.
An example of a breach of agreement clause
Here’s how a breach of agreement clause might appear in a contract:
“In the event of a breach of this Agreement by either Party, the non-breaching Party shall provide written notice to the breaching Party specifying the nature of the breach. The breaching Party shall have [insert time period] to cure the breach. If the breach is not remedied within this time, the non-breaching Party may pursue remedies available under this Agreement or applicable law.”
Conclusion
A breach of agreement is a critical concept in contract law, ensuring that parties have a clear understanding of their rights and remedies in the event of non-compliance. By including provisions addressing breaches in contracts, businesses can protect their interests, clarify expectations, and promote accountability. When managed properly, addressing breaches can minimize disputes and help preserve professional relationships.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.