When a party fails to meet their contractual obligations, other parties can take them to court for a breach of contract. Still, the incident must meet specific conditions to make the breach valid, allowing other parties to take legal action.
A breach of contract could be valid if it satisfies the following:
- There is a legally binding contract or agreement.
- The other parties fulfilled their obligations, or they have reasonable explanations as to why they failed to meet some terms or responsibilities.
- The party who committed the breach failed to meet the responsibilities, terms or conditions without any rational reasons.
- The breach caused damages or losses to other involved parties.
Before determining the breach’s details, involved parties should establish the contract’s validity. If the agreement is not legally binding, its breach may be invalid. After verifying the contract’s enforceability, parties could proceed by determining if the wrongdoing affects the other parties. This factor could impact the calculation of damages, meaning compensation may decrease if the breach concerns a trivial term or condition.
These losses may also fall under two categories: direct or consequential, depending on the breach’s circumstances. Sometimes, damages are easy to compute, especially if the agreement indicates dollar amounts for deliverables. Other times, damages can be vague and require further evaluation to determine an exact value.
Establishing a breach of contract can be challenging
A breach’s validity is just as intact as the contract’s enforceability. This means challenges and issues can vary based on what is in the agreement.
Ideally, parties can draft the agreement while considering the possibility of a breach in the future. Doing so can help keep them accountable and determine the appropriate actions to resolve the breach if it happens.