Businesses often negotiate contracts to lock in prices and connect with necessary resources like supplies and services. Contracts also help ensure that a company receives appropriate payment for the goods or services it provides to others.
Most of the time, those who have signed contracts do their best to uphold their agreements with others. However, sometimes businesses end up negatively impacted by a breach of contract caused by another party. Perhaps a vendor refuses to make deliveries or to honor their prior pricing despite committing to it and writing. Maybe a service provider only half-completes a project.
Those contract breaches can prove incredibly expensive for the business. The failure of another organization could lead to a company breaching agreements with clients because it cannot manufacture products to deliver without supplies or complete a project without skilled labor.
How can a business negatively impacted by a breach of contract resolve this issue?
Document matters thoroughly
The first step toward resolving a breach of contract is to establish that the breach occurred. Doing so requires proper documentation. Reviewing the agreement to ensure an accurate understanding of the promises made and then documenting any violations of the terms of the agreement can help a business take action.
Communicate with the other party
There are countless reasons that businesses or service providers might fail to complete contractual obligations. Sometimes, the issue is just a matter of scheduling conflicts or understaffing. Miscommunication can also contribute to unmet expectations and delays in contract fulfillment. In some cases, communicating about the issue can be enough to resolve it.
Take legal action
In scenarios where the other party does not promptly make efforts to resolve a contract issue, asking the courts for support can be a good decision. In some cases, the party in breach of the contract may take immediate steps to correct the issue to prevent litigation from proceeding. If they still do not settle, then a judge could potentially help address the contract breach. Civil court judges can order specific performance, award damages and otherwise help address contract issues.
Responding promptly to a breach of contract can help an organization mitigate its losses when one party does not uphold a contractual agreement. Organizations with custom contracts, and the willingness to enforce them, can avoid scenarios in which other parties cause significant financial losses and operational setbacks.