Contract Violation: Everything you need to know
A contract violation is a regular occurrence in the business world, defined as a breach of any of the terms of a contract that previously agreed by all parties.3 min read
A contract violation is a somewhat regular occurrence in the business world, defined as a breach of any of the terms of a contract that were previously agreed upon by all parties.
Ideally, both parties are happy with a contract situation and no disputes arise, but sometimes things do not go as planned. This may include unexpected events or financial problems that prevent the parties from being able to hold up their end of the contract.
A signature on a contract is legally binding. If one of the parties does not fulfill their duties as stated, this is considered a contract violation, or a breach of contract.
Sometimes the consequences of a contract violation are included in the contract itself. This is common with payment terms, where late fees are enacted if the payment is not made on time.
If there is no provision in the contract, the parties can resolve it themselves, which sometimes means making a new contract to accommodate any changes or concerns. If it cannot be resolved, legal ;action can be taken.
There are several different ways in which a contract violation can occur. This may include failure to provide a good or service, late delivery, non-payment, violation of a non-compete, or any other breach of contract by either party.
When a Contract Is Breached
If there is a contract violation, an involved party may want to recover from any financial harm. If an agreement can't be reached, then this usually involves filing a lawsuit.
The involved parties may wish to file mediation or take part in an arbitration proceeding as an alternative. If the dollar amount is under a certain threshold, which is different depending on the state, contract violation disputes can be pursued through small claims court.
Writing a Contract Violation Letter
If you or your business is contracted with someone who is in violation of their legally enforceable contract, it is best to consult an attorney to discuss how to proceed.
It is typically best to try to work things out directly with the other party before taking any formal action. If that is not possible, then the first action is to send a contract violation letter.
- Always remain professional and businesslike with any correspondence.
- The letter must be sent to the person who signed the contract.
- Some contracts will detail how notice must be given to the other party. Make sure this is followed or the letter may be legally void.
- The letter must be dated. This will be the official date where the person in violation of contract was notified.
- It will state in detail how the party is not fulfilling their portion of the contract, including references to the portions of the contract in question.
- A solution must be proposed. If the problem cannot be fixed, then the letter will propose to end the agreement and request compensation for damages caused.
After the contract violation letter is sent, there are four types of responses that may be received from the person in violation of the contract.
- None. If there is no response after two weeks, it is recommended to send another letter. If there is still no response, it may be best to get an attorney involved.
- The other party may respond that they are not in violation of the contract.
- The other party may ask for a meeting to discuss the situation and come to a resolution.
- The other party may admit to fault and request a meeting to settle the issue.
Remedies for a Contract Violation
When there is a contract violation, the person who was wronged can either request that the contract be upheld or request restitution for damages caused. If the breach was significant, the wronged party can also request full termination of the contract. In this situation, the wronged party would no longer be responsible for their duties under the contract, as well as being awarded payment for damages.
If you find yourself named as the party who has been in violation of contract, it is best to seek legal advice as there could be consequences if it is handled incorrectly, both professional and financial.
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