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FAQ: What is a Breach of Contract?

When a party to a contract “breaches” it, something that was supposed to happen didn’t. It’s basically a broken promise. The construction contractor building your home didn’t complete it on time or substituted materials you specifically rejected. Maybe you didn’t pay the amount you agreed upon. In an investment dispute, perhaps your financial advisor bought or sold stocks without your approval, despite a contractual requirement that she call you to discuss such issues.

We enter a large number of contracts in our daily lives, and when we do, we agree to either perform or refrain from certain behaviors. So, it’s not uncommon to find yourself in a breach of contract dispute.

Your lease? That’s a contract, and you can breach it by having an unauthorized roommate, making structural changes to the apartment without authorization, failing to pay on time, or vacating the premises before your lease expires.

Your gym membership? It’s governed by a contract that probably requires you to pay a monthly or annual fee, wear certain attire, and use the equipment safely. If you don’t, you might breach the contract, which could allow the gym to cancel your membership. Likewise, even if you stop going, the gym can typically continue to collect payment from you. Otherwise, you might have breached the contract, and you could be sued for the remaining amount of money that would have been collected for your membership period. (It works a lot like your lease.)

The vendor who provides you accounting, bookkeeping, design, or other services? You have to pay according to the terms of the contract (a/k/a agreement), and they have to provide the services they promised to. Either one of you could also breach the contact by disclosing confidential information you agreed to protect.

The good news is that not every contract dispute has to go to court. Your contract might have a dispute resolution clause that mandates mediation, arbitration, or a process that includes both before a lawsuit is filed. You can also elect an alternative dispute resolution (“ADR”) process in most cases.

NOTE: This post is a general overview of the defenses to workers’ compensation (“WC”) penalties for failure to secure WC insurance. It is not legal advice, and there is certainly no guarantee that any of the actions detailed above will generate a similar or specific result. Past success is never a guarantee of a future outcome. If you require information or advice applied to your unique situation, please make an appointment to discuss it with an attorney. Don’t rely solely on what you read on the Internet.