Steps to Take If You Have to Breach a Contract

If you plan to breach a contract, you should be prepared for the non-breaching party to bring a civil case against you.

Are you worried that an action you’ve taken places you in the position of being in breach of contract? With potential legal consequences looming, it’s important to understand your options. Here’s a look at the steps that need to be taken if you breach a contract.

What Is a Breach of Contract?

Breaching a contract essentially means “breaking” a contract. A breach of contract takes place whenever one party in a binding agreement fails to follow agreed-upon terms. Breaches can happen with both formal written contracts and oral contracts. These are the three core ways that a person can breach a contract:

• Not completing a payment, service, or delivery on time.
• Not completing a payment, service, or delivery at all.
• Not completing a payment, service, or delivery according to the terms specified in a contract.

A breach of contract is not generally considered a crime. However, it could be if your actions involve fraud. Contract breaches are typically handled as private matters between the parties involved with the contract. That doesn’t mean that a person who is in breach of a contract won’t face consequences.

When wronged parties take legal action, courts will generally hand down rulings that are designed to leave a non-breaching party in the same economic place that they were in prior to the breach. As the person who breached a contract, you may be ordered to pay restitution in the form of money owed, damages, or both. The contract is then formally canceled. Courts can also legally enforce a contract by mandating that you deliver what was promised.

Steps to Take If You Have to Breach a Contract

Ideally, you will take steps to avoid a breach of contract by first obtaining legal permission to fail to complete some or all of your contract duties. This is called voiding a contract. Some acceptable causes for voiding a contract include lack of capacity, impossibility, duress, fraud, unconscionable terms, illegality, or breach of contract from the other party.

In some cases, simply reaching out to the other party to let them know that you are in danger of breaching a contract can bring forth a resolution. Both parties have the legal right to agree to payment plans, substitutions, or contract adjustments. Attempting to breach a contract without fully understanding your legal duties is risky. If you believe that you need to breach a contract, it’s important to first contact a business attorney to get an idea of the enforcement options available to the non-breaching party.

What Else Is There to Know About Breaching a Contract?

If you plan to breach a contract, you should be prepared for the non-breaching party to bring a civil case against you. As a defendant, you have the right to respond with affirmative defenses that explain your reasons for not being legally responsible for the contract breach. Defendants in breach of contract cases should be prepared to produce evidence using bills, receipts, emails, photos, and witness statements that support their points.