You may execute business contracts with everyone from your custodians to the company that refills the vending machine in your lobby. Contracts are crucial to the predictability of business operations and your company’s overall success.
You need to be able to rely on the performance of employees and the delivery of products in order to keep your company solvent. When someone violates the terms of a contract, it can have major consequences for your company. How should you respond to a breach of contract?
Notify the other party
Some breaches of contract are intentional and malicious. Others are simple mistakes. You might want to start with informal communication, like a text message or email, if you suspect a simple oversight.
If you don’t get a response or if the other party doesn’t correct the issue, you could send a formal letter drafted by your lawyer warning of the breach. If they still don’t resolve the issue, you may have to file a lawsuit.
Prepare for court
When a party that is aware of a breach of contract does not correct the issue, court filings can help resolve the matter. Sometimes, knowing they have to go to court can motivate the other party to fulfill their contractual obligation. Other times, they may agree to negotiate with you to resolve the issue out of court.
If you do have to go to court, you can ask a judge to enforce your contract, award your damages or even dissolve the contract. Reviewing your contract and documenting the breach are usually the first steps in protecting your business during a contractual dispute.