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3 possible solutions if a breach of contract hurts your company

On Behalf of | Oct 21, 2021 | Uncategorized |

Formalizing an agreement in a contract probably means that it is important for your business. Whether you just hired a new independent contractor to help with the project or found a new supplier to provide something you need for your most popular product, you want to protect your business when bringing in new talent or new resources.

Putting everything in writing protects your company by clarifying everybody’s obligations and expectations. Not even a written contract ensures the other party will follow through on the agreement. The sad truth is that not everyone who signs a contract with your company will fulfill their responsibilities. A contractor might take an advance payment and then not complete the project. A supplier might fail to deliver goods and leave your production line idling for a day or longer.

When that happens, your company will suffer losses because of the breach of contract. You can potentially go to court and seek one of the three solutions below to the issue.

Terminate your contractual obligations

Many times, the language of the contract that you sign makes it clear that the document remains enforceable even if one party violates one of their obligations or another clause of the agreement.

In other words, you may still have obligations to the other party that has failed to fulfill their end of the bargain. The courts could effectively invalidate or void the contract and may be able to help you seek repayment if you had already invested in goods or services that you did not receive.

Seek damages caused by the failure of the other party

When there are obvious financial consequences to the other party’s breach, like your inability to complete a project and therefore the loss of income associated with it, you may be able to hold the other party responsible for the financial losses that resulted from their failure. Claims for damages related to a contract breach will typically require documentation that the courts can validate.

Request specific performance to obtain the promised work or materials

A civil judge can order specific performance after a breach of contract. Specific performance involves a court order obliging them to follow through with at least some of their prior contractual obligations to your business.

Any of these three solutions can be a way for your company to mitigate the damage done by another business, contractor or supplier who doesn’t abide by a contract with your company.