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When can you legally breach a contract?

There are many reasons that a contract can be breached by your company or the party you entered into a written agreement with. In a previous blog post, you learned about the guidelines used by the court to determine whether a breach of contract is a material one. In this blog post, you’ll learn when it may be okay legally for your Las Vegas business to violate the terms in a contract.

The Judicial Education Center at The University of New Mexico points out several available options you may be able to use as a defense in business litigation if you have been sued for breaching your contract. These options include the following.

  • The contract contains incorrect information: This may include the wrong date for a service to be               delivered, the service is inaccurate or the name of the party is incorrect.
  • The parties who signed the contract were legally incapable of doing so: For example, a company manager may not be authorized by his employer to enter into the legal agreement.
  • The contract states that if the agreement is breached, the other party can only collect a certain amount in damages.
  • The contract violates a state or federal law
  • Fraud was used to obtain the contract: The contract implies that the product or service is for internal use but the company is actually planning to sell it to another party.
  • One party knows information that is not clarified or revealed in the contract: An example would be a company purchasing a building with structural problems that the selling party knows about and fails to disclose.

In the event that something happens to make the contract unfillable, the party accused of breaching the agreement may be able to show that the breach was unavoidable. This could include the destruction of the product to be provided through fire or some other event.

The above information is not to be taken as legal advice – it for educational purposes only.

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