When you’re working with clients and have contracts, both parties are protected. But when your client breaches the contract, what do you do? There are many words thrown about in the legal world when it comes to a breach of contract. Here are a few questions that you may have:
- What happens if not every single one of the details ends up exactly as written in the contract?
- What happens when your contract is breached?
- Does that mean the whole contract is void?
- What if the breach benefits the client? Does that make a difference?
Let’s run through the basics of contract, what types of breaches there are, and what to do if it happens.
Before we get into what a breach of contract is and what happens in the event of one, we need to know what a contract is. At its base, a contract is an agreement that is enforceable by law.
Here’s an example: You agree to start a personal training session with a client, and they promise to pay you in return. You nail down the details, and you both agree and understand the terms. Contract established.
What is Considered a Breach of Contract?
A breach of contract is any violation of the contractual obligation without a legal excuse by either involved party. There are two kinds of breach:
A material breach occurs when one party fails to perform as agreed upon in the contract, resulting in the non-breaching party receiving something substantially different from what was agreed on. In the case of a material breach, the non-breaching party’s performance is generally not required.
A material breach would be if you agreed to design a workout plan for your client, but send them a meal plan instead.
Despite some variation in the agreement, a minor breach is when the other party still receives what was agreed in the contract. In the case of a minor breach, the non-breaching party is still legally required to perform.
Example: You forgot to send the shopping list along with the meal and exercise plan that you agreed upon.
How to Determine the Kind of Breach
How do you know what kind of breach occurred? Well, if a client sues you for the breach, the court will decide if the breach is material or minor using several factors. Some of those may include the following, which are laid out in the Restatement (Second) of Contracts:
- The extent to which the injured party will be deprived of the benefit that he reasonably expected;
- The extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
- The extent to which the party failing to perform or to offer to perform will suffer forfeiture;
- The likelihood that the party failing to perform or to offer to perform will cure his failure taking account of all the circumstances including any reasonable assurances;
- The extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.
Is A Court Ruling Required in a Breach of Contract?
It will always be in everyone’s best interest to settle things out of court.
Most of the time, it’s recommended to reach out and talk to the client, no matter who is at fault. It may be a misunderstanding, and professional communication can diffuse the situation quickly.
What happens if a judge finds a breach?
If you are unable to workout the breach between yourselves, you may need to go to court.
The judge will consider the harm to both you and your client, and your good faith in handling the situation. They’ll also consider the client’s actions, examine the contract’s legitimacy, and whether the breach is material or minor.
If a court finds a material breach, it likely means that the non-breaching party will not have to fulfill the contract. They also may be awarded damages. If a judge finds a minor breach, it is likely that the non-breaching party will still have to fulfill the contract, but may be awarded damages.
If you’re unable to work things out directly with your client we recommended consulting a lawyer for guidance before doing anything else.