Businesses often negotiate contracts with a variety of outside parties. They may sign employment agreements with workers, leases with property owners and agreements with vendors. Contracts can help control costs and provide accurate timelines for projects and product delivery dates.
Organizations typically expect that the parties that signed contracts with them should follow through on all promises. Occasionally, one party that signs a written agreement cannot or does not adhere to the agreement. Organizations affected by contract breaches then have to make decisions about how to respond to the issue at hand.
What steps should leadership within a company take in the event of a frustrating breach of contract scenario?
Documenting the issue
The first step toward resolving a breach of contract matter involves gathering evidence that the breach occurred. Emails confirming that a vendor did not deliver materials, photographs of unfinished projects and bank statements affirming that no payment came can all help validate claims that one party breached an agreement with another. A review of the contract is often beneficial during this stage to ensure that the circumstances actually constitute a breach of the original written agreement.
Seeking amicable solutions
After there is proof of the contract breach and affirmation that one occurred, the next step to take might be to discuss the matter with the other party. A service provider might finish the project after realizing that certain aspects of the job remain uncompleted. A vendor might deliver the remainder of an order after receiving proof that only a partial delivery occurred.
Sometimes, communication is all that is necessary to resolve the issue. Other times, the party in breach of the contract may provide excuses or may deny that the issue even occurred. If the party in breach does not immediately act to resolve the issue, then enforcement actions may be necessary.
Filing a civil lawsuit
After obtaining proof of a breach of contract and giving the other party a chance to remedy the situation, litigation is often the best option available. Organizations that initiate breach of contract lawsuits can sometimes motivate the other party to finally correct the issue.
Even if the other party does not immediately address the matter, a judge could potentially resolve the dispute using their authority. Judges can enforce a contract. They can invalidate it. They can award one party damages or enforce penalty clauses. In scenarios where the people involved in the contract dispute are not eager to correct the issue, a civil court judge can effectively resolve the matter.
Being proactive about handling contract disputes may require business lawsuits if other solutions don’t lead to a prompt resolution. Organizations that enforce contracts may suffer fewer losses after contractual breaches.