Whether you own a small business or operate a large corporation, you may have entered into a contract with another company. Ideally, businesses enter into contracts with the intent to benefit both parties. When one party fails to meet their end of a contractual obligation, however, it can cost precious resources, time and money.
Breach of contract is one of the most common reasons for a commercial litigation dispute. As a business owner or operations manager, it is critical to know how a contract is set up and what to do if someone does not live up to their end of the agreement.
What does a contract entail?
Contracts are legally binding agreements between two or more parties. However, they must include certain elements in order to be enforceable in court. Both parties must authorize the document, and the terms of the contract must be clear, concise and reasonable. Once each party accepts the terms of the contract and signs, the document becomes legally binding.
What is a contract breach?
Unforeseen circumstances may arise when carrying out the terms as planned, which could lead to issues in fulfilling the contract. There are several ways that companies can have a breach of contract, including the following:
- A term outlined in the contract is overlooked.
- Specific deadlines are not met.
- Unclear language leads to an issue.
- One party backs out of the contract altogether.
A breach of contract can be costly. You may lose product, services or revenue due to contract negligence and delays in fulfillment. In such situations, a business attorney can be extremely valuable in advocating on your behalf and helping you to pursue compensation for your damages.