The cornerstone of just about any business is entering into contracts with customers, vendors, employees and partners. Some are a straightforward bill of sales, but others are complex agreements with multiple partners worth millions of dollars. One thing that is generally understood is that those who sign a contract are expected to honor it. Sometimes, however, one party fails to deliver on their part of the agreement. When this happens, the other party may want or need to pursue legal action.
Determining breach of contract
In California, the party who pursues legal action in court needs to prove that a breach exists, that the breach is negatively impacting business, that there is a contract, and how large the breach is.
Different levels of breach
There are two kinds of breach in California:
Material breach: This breach negatively affects the other party.
Immaterial breach: This partial breach does not meet the agreement as outlined in the contract.
Determining the level of the partial breach
The courts weigh different factors in determining material versus immaterial:
- Did the non-breaching party still get the same anticipated benefit?
- How would the non-breaching party compensate for the damages?
- Did the breaching party attempt to fulfill obligations, or does it plan to?
- What is the level of damage to the non-breaching party?
- Was the breach an intentional act of negligence or an innocent accident?
Experience can make a difference
Attorneys with knowledge and experience handling business contracts and agreements often can provide insight as to the level of the breach before going to court, thus giving clients an understanding of the cost and potential length of the trial. An attorney can also work with the other side resolve the matter equitably before going to court, thus saving clients the time and cost of litigation.