Contracts contain requirements for both parties, and it’s critical that they’re all met in accordance with the contract terms. When terms aren’t met by either party, a contract breach occurs. The circumstances surrounding the breach determine what type of breach happened and what resolutions are possible. This sometimes leads to significant problems for the wronged party. These are major issues if they result in losses for that party.
It’s critical to review the contract to determine whether there are any requirements for how the breach is handled. Many contract breaches are resolved through alternative dispute resolution methods, but others may require litigation.
When do contract breaches lead to litigation?
Litigation is more likely when a material breach has occurred, meaning the issue isn’t just a small hiccup but fundamentally impacts the purpose of the contract. For example, if a construction company agrees to build a commercial space by a specific deadline and misses it by months, causing lost business for the other party, that’s likely grounds for a lawsuit. Other common triggers include repeated failures to perform, disputes over the interpretation of the contract terms or refusal to pay for completed work.
Contract breaches that require litigation may take considerable time to resolve. This can make it difficult for the involved parties to be able to focus on other matters. It may be beneficial to work with someone who can handle the contract breach so people within the company can focus on their work duties.
