What to Know About Handling a Breach of Contract in North Carolina

Contracts form the backbone of most business dealings—whether you’re bringing on a subcontractor, working with a vendor, or finalizing a real estate transaction. But when one party fails to meet their obligations, it can quickly lead to problems. That’s where the concept of a breach of contract becomes important.

If you’re a business owner in North Carolina, understanding what qualifies as a breach and how to handle it can help you avoid costly delays, financial losses, and unnecessary legal disputes. Here’s what you should know.

What Is a Breach of Contract?

A breach of contract happens when one party fails to fulfill their obligations under a legally enforceable agreement—without a legitimate legal excuse. In North Carolina, this breach can be classified as either material, meaning it significantly impacts the core of the agreement, or minor, which involves a less serious deviation.

To successfully bring a breach of contract claim in North Carolina, you generally need to prove these four key elements:

1. A valid contract exists – This may be a written, verbal, or implied agreement based on the actions of the parties. However, note that certain types of contracts must be in writing to be enforceable under North Carolina law.
   
2. You performed your obligations – You must demonstrate that you met your responsibilities under the contract.
   
3. The other party failed to perform – The person or business you’re suing did not fulfill their end of the deal.
   
4. You experienced damages – You must show that the breach resulted in financial loss or other harm to your business.
   

Understanding these elements is critical to evaluating whether you have a valid claim and how best to proceed.

Different Types of Breach

Not all breaches of contract are equal, and understanding the type of breach can help you determine the right course of action.

• Material Breach – A major violation that strikes at the heart of the agreement. This type of breach can justify the non-breaching party in terminating the contract and seeking damages, as it significantly undermines the purpose of the deal.
  
• Minor (or Partial) Breach – A less serious failure to meet the terms of the contract. While it may still cause inconvenience, it typically doesn’t prevent the contract from being completed and may only warrant limited remedies.
  
• Anticipatory Breach – This happens when one party communicates, either through words or actions, that they don’t intend to fulfill their future obligations. When this occurs, the other party may consider renegotiating or taking legal steps to protect their interests before the actual breach takes place.

Examples of Breach of Contract

Breach of contract can take many forms, and whether it’s considered major or minor depends on how significantly it affects the agreement. Here are some typical examples under North Carolina law:

Material (Major) Breaches

These are serious violations that impact the core purpose of the contract and may justify legal action:

• A contractor delivers work that fails to meet the agreed-upon standards.
  
• A client refuses to pay for services that were completed in accordance with the contract.
  
• A business partner discloses confidential information or violates a non-compete clause.
  

Minor (Partial) Breaches

These involve lesser infractions that don’t fundamentally alter the value or purpose of the agreement:

• A contractor uses a substitute brand of materials that still meets the required specifications.
  
• A subcontractor submits timesheets late but provides them upon request, with no impact on payment or performance.
  
• A freelancer misses a soft deadline, but the delay does not affect the launch timeline or cause financial harm.
  

It’s also important to remember that not every misstep constitutes a breach. If the failure to perform was due to unforeseen events—like natural disasters or supply chain issues—and the contract includes a valid and enforceable force majeure clause, the party may have a legitimate defense.

Potential Legal Resolutions for Breaches of Contract in North Carolina

If you believe a contract has been violated, there are several legal steps you can take to protect your rights and pursue a resolution:

1. Send a Demand Letter

Before heading to court, it’s often wise (and sometimes required) to send a formal demand letter to the other party. This letter outlines the nature of the breach, states what action you expect—such as payment or performance—and sets a deadline for resolution. A well-drafted demand letter can sometimes resolve the issue without further legal action.

2. Explore Negotiation or Mediation

In many cases, disputes can be resolved without litigation. Negotiation or mediation allows both parties to discuss the issue with the help of legal counsel or a neutral third party. This can be a more efficient, cost-effective way to reach a mutually agreeable solution.

3. File a Lawsuit

If informal efforts fail, you can take the matter to court. In North Carolina, breach of contract claims may be filed in District Court (typically for claims under $25,000) or Superior Court (for larger or more complex cases). A judge will review the facts, hear evidence, and determine if a breach occurred and what remedies should apply.

4. Seek Legal Remedies in Court

Depending on the circumstances of the breach and the terms of your contract, a court may award different types of relief:

• Compensatory Damages – To reimburse you for direct financial losses caused by the breach.
  
• Consequential Damages – To cover additional losses that were foreseeable as a result of the breach.
  
• Specific Performance – A court order requiring the breaching party to fulfill their contractual obligations (used in unique cases, such as real estate transactions).
  
• Rescission – To cancel the contract and release both parties from further obligations.
  

The remedies available to you will depend on the type of contract, the nature of the breach, and the specific language in your agreement.

Working with an experienced attorney can help you determine the most effective course of action based on the facts of your case and the potential value of your claim.

When to Contact a Business Attorney

Contract disputes can quickly become complicated, and even minor missteps in how you address them can lead to costly consequences. Whether you’re looking to enforce your rights under a contract or defend yourself against a breach allegation, having a knowledgeable North Carolina business attorney by your side is essential to protecting your interests.

At Anderson Legal, we work with business owners and professionals across North Carolina to provide strategic guidance on contract review, negotiation, and dispute resolution. If you’re dealing with a breach of contract—or want to proactively avoid one—reach out to our team today. We’re here to help you safeguard your contracts and support your long-term business success.

Nothing on this website or this blog should be considered legal advice. Anderson Legal does not represent you and no client-attorney relationship is formed until you have completed our client intake process.