What happens when a client breaches the contract?
You know that you need contracts for your business.
They protect you.
They protect your client.
You have a stock contract that you input specific details into for each shoot, but…
- what happens if not everyone of those details ends up exactly as written in the contract?
- what happens when your contract is breached?
- does that mean the whole contract is void?
- what if the breach benefits the client? Does that make a difference?
Let’s run through basics of contract, what types of breaches there are, and what to do if it happens!
What is a Contract?
Before we get into what a breach of contract is and what happens in the event of one, we need to know what a contract is. At its base, a contract is an agreement that is enforceable by law.
For a court to find that a contract does, in fact, exist, four elements must be found:
- Offer: One person promises to do, or not do, something in the future.
- Consideration: In exchange for the promise in the offer something of value is offered in return. This may include monetary payment, a service, etc.
- Acceptance: When the promise in the contract is agreed upon or performed. In general, the acceptance must mirror the offer. Meaning the terms set are agreed upon as is and no changes are suggested.
- Mutuality: This factor is known as the “meeting of the minds”. This means that the parties to the contract understand what they have agreed to.
Example: You promise to take wedding pictures for your client; they promise to pay you in exchange. You both agree on who/what/when/where/how much, and you both understand those terms (i.e., both sign a written contract stating those terms.)
What is Considered Breach of Contract?
A breach of contract is any violation of either party’s contractual obligation without a legal excuse. There are two kinds of breach:
• Material Breach
A material breach is when one party fails to perform as agreed upon in the contract, resulting in the non-breaching party receiving something substantially different than what was agreed upon. In the case of a material breach, the non-breaching party’s performance is generally not required.
• Minor Breach
A minor breach is when despite some variation in what was agreed upon the other party still receives what was agreed upon in the contract. In the case of a minor breach, the non-breaching party is still legally required to perform.
Example: You forget to go to a scheduled wedding to shoot versus you spend 5.5 hours shooting a wedding instead of the agreed upon 6 hours.
Determining if a Breach is Material or Minor
So how is a breach determined to be a material breach or a minor one? If a client sues you for breach of contract, the court will make the determination. Several factors are used to make that determination. They may include the following factors laid out in the Restatement (Second) of Contracts:
- The extent to which the injured party will be deprived of the benefit that he reasonably expected;
- The extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
- The extent to which the party failing to perform or to offer to perform will suffer forfeiture;
- The likelihood that the party failing to perform or to offer to perform will cure his failure taking account of all the circumstances including any reasonable assurances;
- The extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.
Can I fix a breach without court?
Surely you can try!
In fact, it is recommended to reach out to a client and talk with them about the breach, whether it was their breach or yours. Taking actions to prevent getting into court will help the overall situation if you have the right actions to take.
Many times situations are often misunderstandings that needs clarified. Communicating with the client in professional manners can often diffuse the situation.
However, It is recommended to consult a lawyer for communications and actions guidance before doing anything if you’re unable to work things out with the Client.
For example, a Bride fails to make their payments in accordance with their contract and you’re unable to get ahold of said bride. You don’t want to think “Well she didn’t finish paying so I’m not going to show up at wedding.” Then end up with a blinding angry bride. It is best to reach out to a local attorney to help guide your actions.
What if it can’t be fixed?
You may have to go to court.
On one hand it may mean that if a client sues you for breach of contract, the court will look at how bad the harm to the client was that was caused by your ‘breach’, how bad the harm will be to you if the contract is terminated, and your good faith in the situation.
On the other hand, the court will also take into consideration the client’s actions as well. They will examine the legitimacy of the contract, the expectations and actions of the parties and whether the breach is material or not.
What happens if a judge finds a breach?
If a court finds a material breach, it likely means that the non-breaching party will not have to fulfill their end of the contract and may be awarded damages. If a judge finds a minor breach, then it is likely that the non-breaching party will still have to fulfill their end of the contract, but may be awarded damages.
You forgot to go shoot at the wedding?
The client will probably not have to pay you, and you may have to pay them to remedy the fact they don’t have pictures of their wedding. Do you spend 5.5 hours instead of 6 hours shooting at their wedding? They will probably still have to pay you. It is possible you will have to pay a small amount of damages for the half hour you missed.
This is a good overview of contract breaches to get you started. It is always recommended to make sure you have a lawyer-drafted contract for maximum protection, and if need be, consult a local attorney in the event of a breach.