Does a Breach of Contract Terminate A Business Agreement ?

A breach of contract occurs when one party of the contract fails to fulfill the responsibilities defined in the contract. In a loan agreement, for example, a breach may occur when the debtor fails to make a payment on the outstanding balance by a specified date and time.

Handling a breach of service before to terminate a business agreement

A breach of a service contract may occur if the service provider fails to deliver on time or if the purchaser fails to pay. Regardless of the type of contract, contract breaches occur every day. As such, there are remedies and proceedings in place to deal with a breach of contract.

The most common question regarding a breach of contract, specifically relating to business partnerships agreements, is “does that breach of contract terminate the business agreement itself?”
The short answer is no, a breach of contract does not terminate a business agreement; however, a breach of contract can lead to termination.

Final breach of contract

While the exact terms may vary by contract, business partnership agreements typically require notice of breach of contract to be sent to the breaching party and the opportunity for the breaching party to remedy the breach. If the breaching party has not sufficiently remedied the breach after 30 days of receiving the notice, then you may terminate the business agreement.

Keep in mind that this breach of contract proceeding is the generally accepted method and that these terms still need to be laid out in the original dissolution provision of the business agreement. In any case, you should follow the dissolution section of your contract.

If you believe that your business partner is in breach of contract, then the first step is usually to send a Notice of Breach of Contract. This notice should include the title of the original contract, the date it was executed, the specific clause that is believed to be breached, an acceptable remedy and a reservation of legal rights. You can get started with this free template.