Operating business agreements under the protection of a well-written contract is critical to your organization’s success. When you are able to articulate your expectations in a formal and professional manner, you have a better chance of reducing confusion and ignorance from the other party.
Failure to abide by the terms and conditions of the contract by you or the other party creates discord that could eventually undermine the relationship entirely. Your understanding of the types of contract breaches is helpful for reference if a disagreement ever arises.
Material vs. minor
According to The University of New Mexico Judicial Education Center, for you to even claim a breach of contract, an official legal document must exist containing signatures of both you and the other party. Below is an explanation of material versus minor breach of contract:
- Material breach: This situation is one where the outcome of the agreement is different than the expectations outlined in the contract. Consequences including lost resources, damaged reputation, lost profit and compromised intellectual information are all examples of possible outcomes. A material breach means you are no longer required to deliver on your promises, but you may receive damages.
- Minor breach: This situation is one where a portion of the signed contract was not delivered according to your expectations. While you are still required to deliver on your promises, the collection of damages is also a possibility.
Reference your contract
If you ever question whether or not the expectations and promises outlined in your contract are being delivered as promised, reference your contract to clear the confusion. Your commitment to writing a clear and concise agreement and verifying a mutual understanding between you and the other party is critical to avoiding misunderstanding altogether.