Construction companies use contracts to outline the responsibilities, timelines and expectations of all parties involved in a business agreement. However, if a party fails to fulfil their responsibilities outlined in a legal agreement, it can lead to a breach of contract.
Breach of contracts can disrupt and delay projects and lead to serious damages and legal issues. Knowing the different types of construction contract breaches can help contractors, property owners and businesses understand their rights and determine how to resolve the issues. Here are four common types of construction contract breaches:
1. Material breach
A material breach occurs when a party fails to fulfil a major contractual term, leading to serious damages. A delayed shipment is a common type of material breach. If an important shipment of goods is not shipped by a critical deadline, it can prevent a construction project from starting.
2. Minor breach
A minor breach occurs when a party fails to fulfil a non-essential term of a contract. Overall, an agreement may be fulfilled despite the minor breach. For example, a shipment of goods may have been delivered a few days after the deadline but still arrived in time for the work to go ahead on schedule.
3. Actual breach
An actual breach occurs when a party completely or partially fails to fulfil their contractual obligations. The contract party may go so far as to refuse to fulfil the terms of a contract. For example, a party may refuse to ship materials for a construction project.
4. Anticipatory breach
An anticipatory breach occurs when a party indicates they will not be able to fulfil their contractual duties. For example, a party may have faced difficulties shipping material for a project. As a result, the party may notify the receiving party in advance that the shipment will arrive late.
Professional legal guidance can help resolve construction contract breaches.