Contracts can protect your business from potential liabilities from partners, employees, vendors, and clients. With a contract in place, both parties have aligned expectations of what each brings to the table, what they get in exchange, and what could happen if expectations aren’t met. 

When one party fails to live up to their promises, the consequences can quickly escalate into costly disputes. Understanding the basics of breach of contract will help you protect your business and know when to seek professional help.

What Is a Breach of Contract?

A contract is a legally enforceable agreement between two or more parties. When one party fails to perform as promised, they are in breach of contract. What this looks like can vary between businesses and what was stipulated in the contract. This can be not delivering goods, missing deadlines, or violating agreed-upon terms on the contract. 

For example, let’s say you’re working with a supplier in Pittsburgh who promises to deliver inventory by the 15th of each month. However, they repeatedly arrive weeks late. Their failure to deliver goods within the agreed deadline can be grounds for a breach claim. 

In this case, delays are sometimes a common part of doing business. However, repeated delays can undermine your ability to run smoothly. In other cases, even relatively small failures can impact:

• Your operations
• Your business reputation
• Client relationships
• Revenue and overall financial performance

Breach of contract cases often hinge on the contract’s specific language. Clear, carefully drafted agreements can reduce disputes, but even with well-written contracts, breaches still occur. Having the guidance of an experienced business dispute lawyer can be critical when issues surface.

Types of Breach

Not every instance of breach carries the same weight. Pennsylvania law recognizes several types of breaches, each with different implications for your business:

Material Breach

A material breach arises when one party’s failure goes to the very heart of the agreement, preventing you from receiving the primary benefit of the deal. Courts generally consider this the most serious type of breach. They look at several factors to determine if a breach is material:

• How much of the contract has been completed
• Whether the breach was intentional
• How much it affects your ability to operate

Example: You hire a contractor to renovate your store, and they walk off the job halfway. In this case, they breached the very purpose of the contract, which is to deliver a finished store. 

You may be entitled to terminate the agreement. The damages would cover the costs of hiring another contractor to finish the work and the lost income due to the delays that prevented you from operating. 

Minor Breach

A partial breach happens when one party doesn’t perform exactly as promised. However, the essential purpose of the agreement is still met. This type of breach can be frustrating, but it doesn’t usually justify ending the entire contract.

While occasional setbacks are common in many industries, repeated offenses can take a toll on your business. They may even escalate into material breaches if they significantly interfere with your ability to meet your obligations.

Example: A vendor delivers office supplies a few days late. While the delay may cause inconvenience, you still received the supplies and can continue running your business. In such cases, you might seek damages for the disruption rather than canceling the deal altogether.

Anticipatory Breach

An anticipatory breach occurs when the other party clearly communicates (through words or actions) that they do not intend to fulfill their part of the bargain in the future. This gives you the legal right to respond before the actual deadline arrives. 

Recognizing anticipatory breaches early can protect your operations. By acting on a potential breach, you can mitigate losses before they spiral into more serious disruptions.

Example: A supplier informs you weeks in advance that they cannot deliver critical materials. You don’t have to wait until the delivery date passes to take action. Instead, you can seek alternatives and possibly pursue legal remedies immediately. 

For instance, you could work with another supplier to provide the materials and then seek damages from the original supplier to cover the costs incurred. 

Actual Breach

This occurs when the other party fails to perform as promised by the agreed-upon deadline. This could mean missing payments, delivering the wrong product, or failing to provide services.

These breaches are often the easiest to identify and prove since the failure is tangible and documented. However, deciding how to respond, such as demanding immediate performance, seeking damages, or terminating the contract, depends on the contract terms and the breach's impact.

Legal Time Limits: Statute of Limitations

Pennsylvania law sets clear deadlines for suing for breach of contract. By default, businesses have four years to file a lawsuit for both written and oral contracts. This starts the moment the breach occurred, regardless of when the breach was discovered.

Under the Pennsylvania Commercial Code at 13 Pa.C.S.A. §2725, parties can agree to reduce the statute of limitations to at least one year. This is typically used for contracts involving the sale of goods. However, parties cannot extend the statute of limitations beyond four years. 

If you wait too long, you could lose your right to enforce the contract in court. Speaking with a business dispute lawyer when you recognize a breach of contract can help you protect your business’s interests.

How Very Law Helps

At Very Law, we understand the challenges businesses face when contracts fall apart. A well-written and enforced contract protects your interests. Our team supports Pennsylvania businesses with legal services designed to keep your business whole.

• Contract Drafting and Review: Clear, precise contracts are the best defense against future disputes. Our business contract attorneys help ensure your agreements are written to minimize risks and safeguard your rights.
  
  
• Negotiation and Dispute Resolution: Not every breach is worth incurring lawsuit costs. If you want to mitigate the impact of a breach, we can help resolve disputes through negotiation or mediation. This could save your business time and money while preserving professional relationships.
  
  
• Litigation: When necessary, we are prepared to fight aggressively in court. Our team, led by Ryan D. Very, Esq., has successfully represented clients in complex commercial litigation across Pennsylvania.

By working with a dedicated business law firm, you get advocates who understand the details of contract law and how to leverage them in your favor.

What Business Owners Should Do First

If you believe another party has breached or may breach your contract, here are the steps you should take before rushing into legal action:

1. Gather Documentation

Start by collecting everything that could serve as evidence of the agreement and the breach. This includes:

• The original contract and any amendments
• Invoices, receipts, or proof of payments
• Emails, letters, or text messages related to the agreement
• Delivery logs, project timelines, or performance reports

Having organized documentation can give you a strong claim. The stronger your records, the easier it will be to demonstrate how the other party failed to uphold their obligations.

2. Evaluate the Impact

Not every breach justifies aggressive action. Some breaches are minor inconveniences, while others can cause significant financial or operational harm. Ask yourself questions such as:

• Did the breach cause you to lose revenue or customers?
• Has it delayed or disrupted your ability to meet your own contractual obligations with others?
• Is this a one-time issue or part of a pattern of repeated problems?

By honestly assessing the impact, you’ll be better positioned to decide whether to push for strict enforcement of the contract, negotiate a compromise, or move on to taking stronger measures.

3. Attempt Resolution

Before heading to court, it’s often worth trying to resolve the issue directly. In many cases, the other party may be willing to correct the mistake once it’s brought to their attention. A polite but firm communication outlining the problem, supported by your documentation, can sometimes resolve matters quickly.

That said, always be cautious in how you communicate. Avoid making threats or emotional statements that could later be used against you. A clear, professional approach demonstrates that you are acting in good faith, which may work in your favor if the dispute escalates.

4. Consult With Counsel

Even if the breach seems straightforward, you should never make major decisions like withholding payments or suing for breach of contract without first consulting an attorney. An experienced business law attorney can:

• Help you understand your rights and obligations under Pennsylvania law
• Assess the strength of your claim 
• Advise you on the best strategy
• Protect you from missteps that could weaken your case or expose your business to liability
  
  

Preventing Future Breaches

While you can’t prevent every dispute, you can significantly reduce risks by taking proactive steps:

• Invest in Strong Contracts: Vague or incomplete agreements are one of the leading causes of disputes. Having your contracts professionally drafted or reviewed is an investment in your business’s stability.
  
  
• Use Clear Communication: Confirm expectations and follow up regularly with partners and vendors to ensure obligations are met. Ensure all terms are in writing; While oral contracts are enforceable in Pennsylvania law, enforceability depends on the agreement's nature and adherence.
  
  
• Build in Safeguards: Include clauses in your contracts addressing dispute resolution, performance deadlines, and penalties for non-compliance.
  
  
• Stay Proactive: Regularly review your agreements with your attorney to ensure they reflect current business needs and legal standards.

Protect Your Business Interests With Very Law

When a breach occurs and impacts your business operations, you need to take steps to protect yourself. Whether you’re negotiating a resolution, protecting your rights in court, or strengthening your contracts to prevent future issues, Very Law is here to help.

If you’re facing a contract dispute or simply want to safeguard your agreements, reach out to Very Law today to learn how a business dispute lawyer can support your case.