The risk of this happening only increases in scaling companies that manage fast-growing contract volumes.

This is common in companies without a single system of record for contracts, as important contract data gets trapped in static files and so isn’t tracked. It’s also possible that contract obligations just haven’t been tracked effectively by a business, meaning that dates to pay invoices, deliver onboarding and arrange certain goods or services get missed altogether.

If these aren’t communicated effectively between departments, these duties can be missed, resulting in a breach of contract. Whilst most commercial agreements are drafted and agreed by in-house legal teams, it’s often the sales, customer success, and business operations teams that are responsible for performing certain tasks under the contract. 💬 Poor communicationĪlternatively, there could be a misunderstanding between different departments within a business about what the obligations actually are. There could even be other external circumstances that make it challenging to deliver certain goods and services in a timely fashion, like outages or technical difficulties. This is common in supply chain contracts and procurement contracts. One example is where a contracted supplier has failed to deliver certain goods to a business, which can result in the buyer being unable to fulfill the contractual obligations they owe separately to another business. They can happen for a number of reasons: 🤝 Reliance on third parties Unfortunately, it’s not rare for breaches of a contract to happen. This results in certain contractual obligations going unmet, and the promises made within a contract being undermined. What causes a breach of contract?Ī breach of contract is caused by a contracting party’s reluctance or inability to fulfill the terms they originally agreed to within the contract. For this, you’ll need to be able to demonstrate, using evidence, that certain obligations existed under the contract and that these obligations were either not performed or have not been delivered to a satisfactory standard. Next, you’ll need to be able to prove that specific terms within a contract have been breached. If there wasn’t a contract in the first place, then it is impossible for there to have been a breach. Breach of contract elementsĪnother way to understand what a breach of contract is is to understand the various elements of a contract breach, and when a business’ action or inaction falls into the definition of one.įirstly, the contract must have existed and been legally binding between the parties. What is a breach of contract? Breach of contract definitionĪ breach of contract is an instance where one or more parties to a contract either actively breaks or fails to fulfill the terms outlined within a legally binding contract.Ī contract breach can broadly be defined as a violation of any agreed-upon terms and conditions, so the scope of a contract breach can cover everything from late delivery of certain goods or services to missed payments.

This Juro deep-dive explains exactly what a breach of contract is, why they’re happening and how implementing a contract management solution can help your business to prevent them. Without a robust system of record for contracts, key dates can be missed and deliverables can be forgotten, occasionally resulting in a breach of contract.īreaches of contract can cause relationship breakdown between parties, but they can also come at a significant financial cost. As your business scales and your contract volumes increase, managing contract obligations can be a challenge.

Breaching agreement meaning