Ideally, agreements are entered into with both sides benefitting from the outcome. But agreements do not always go as planned, so there can be unexpected delays, financial disputes and other issues that prevent the contract from being honored. A failure to fulfill the promise of the contract is referred to as a breach of contract.
Why claim a breach of contract?
One or both parties signed a contract in the hopes of getting goods or services. The party or parties will likely wish for the contract’s terms to be honored and hold the other side responsible particularly if an alleged breach leads to financial harm. If the initial or informal attempt to resolve the matter fails, the next step is generally a lawsuit.
Reasons why it’s best to avoid a breach
Some businesses find out too late that it’s a bad idea to not take breach of contract seriously. While there can be other reasons as well, here some brief list of why it’s best to avoid it:
- Damage to company’s reputation: A reputation for not delivering on goods or services can lead to a loss of current or future business.
- Damage to partnerships: Partnerships are often irreparably damaged if the breach of contract dispute ends up in court.
- Lawsuits cost money: If the suit awards damages to the other side, you will have to pay that money as well as cover your legal expenses.
- Lawsuits are distracting: Along with paying money, you and your employees may have to focus on the dispute instead of conducting business.
- Specific performance: The ruling may determine that you still must honor the terms and obligations of the contract.
- Contempt: Your company could be held in contempt if it doesn’t follow the order issued by the court.
- Punitive damages: Although less common, this involves the court levying an additional large sum as punishment for what it views seriously offensive behavior.
Legal help will likely be necessary
Not all attorneys have the knowledge or experience to handle a dispute involving a breach of contract, either by resolving the issue before it becomes a bigger problem, or by effectively handling courtroom litigation. It’s best to consult with a firm that provides business law, employment law and litigation guidance to get the best possible results with a minimum amount of distraction. This allows you to focus on running your business.