What is a Correctable Violation?
In the realm of contract law, a correctable violation refers to a situation where one party to an agreement fails to fulfill its obligations, but the failure is not severe enough to warrant immediate termination of the contract. Instead, the breaching party may be able to correct the violation through a process of cure, which allows the parties to continue performing under the agreement.
Types of Correctable Violations
Correctable violations can take many forms, including:
• Technical defaults: Small, insignificant breaches of a contract, such as failure to comply with minor formatting requirements or late payment of a small amount.
• Covenants and conditions: Breaches that are dependent on specific covenants or conditions stated in the contract, such as failure to obtain required permits or licenses.
• Insufficient performance: Failure to perform certain aspects of the contract, but not to the extent of rendering the contract impossible or impracticable.
Key Elements of a Correctable Violation
To determine whether a violation is correctable, courts and arbitrators typically consider the following factors:
• Intent: Was the breaching party aware of their obligations and deliberately chose to ignore them?
• Negligence: Was the breach the result of a genuine mistake or error on the part of the breaching party?
• Cure: Is the breach capable of being remedied, and is the breaching party willing and able to do so?
• Materiality: Does the breach affect the substantial rights or interests of the other party?
Procedures for Correcting Violations
When a party discovers a correctable violation, they may initiate one of the following procedures to address the issue:
• Cure: The breaching party can take immediate steps to correct the violation and restore the agreement to its original terms.
• Notice: The party entitled to enforcement may serve written notice on the breaching party, specifying the nature and extent of the violation.
• Arbitration: The parties may agree to submit the dispute to arbitration, which can help resolve the issue through a fair and neutral process.
• Litigation: The parties may choose to proceed with legal action, with the breaching party required to defend their actions or face legal consequences.
Consequences of Not Correcting a Violation
If a breaching party fails to correct a correctable violation, the non-breaching party may suffer significant consequences, including:
• Loss of future benefits: The non-breaching party may lose access to benefits or privileges promised under the agreement.
• Financial loss: The non-breaching party may incur significant financial losses or expenses as a result of the breach.
• Damage to reputation: A breach of contract can harm the breaching party’s reputation and future business opportunities.
Examples of Correctable Violations
Examples of correctable violations can include:
• Overcharging: A contractor charged a customer an excessive fee for services, but can correct the violation by returning the excess amount.
• Late delivery: A supplier fails to deliver products on time, but can correct the violation by shipping the products promptly.
• Failure to comply: A business fails to obtain required permits or licenses, but can correct the violation by obtaining the necessary approvals.
Conclusion
A correctable violation is a breach of contract that, while significant, does not render the agreement impossible or impracticable. These types of violations can often be cured through a process of correction, which allows the parties to continue performing under the agreement. It is essential for parties to understand the concept of a correctable violation and take steps to address any potential breaches to maintain the integrity of their contracts.
Table: Correctable Violations
| Type of Violation | Examples | Consequences |
|---|---|---|
| Technical Defaults | Failure to comply with formatting requirements | Loss of benefits, financial loss |
| Covenants and Conditions | Failure to obtain permits or licenses | Loss of benefits, financial loss |
| Insufficient Performance | Failure to deliver products on time | Loss of benefits, financial loss |
Footnotes
- Restatement (Second) of Contracts § 241(1) (1981).
- Id.
- See, e.g., United States v. Armour & Co., 402 U.S. 673 (1971).
