Contract breaches can have a negative impact on the wronged business. While many contract breaches are small, there are some that are so significant that they can push the wronged party to take legal action.
The contract breaches that are the most serious are known as major breaches. This happens when one party fails to fulfill a key part of the agreement in a way that defeats the purpose of the contract altogether.
What happens after a major breach?
Once a major breach occurs, the wronged party is usually no longer obligated to uphold their end of the deal. This gives you the right to walk away from the contract altogether, and potentially seek damages for losses you’ve incurred. In some cases, you may be entitled to compensation for direct costs, lost profits or other consequences that stemmed from the breach.
However, it’s important to be cautious and deliberate before labeling a breach as “major.” Wrongly accusing the other party or prematurely ending the agreement could backfire. That’s why documenting the issue and reviewing your contract terms—especially any clauses that define what counts as a material breach—is essential.
The severity of the impact of the contract breach directly impacts the litigation. It’s critical that your company keeps records that show everything related to the breach. That proof could become critical in the legal case. These matters can be complex, so it may be beneficial to have someone on your side who understands what happened and can find ways to represent the best interests of the business.