Almost everyone enters into a business contract with the best intentions. After all, meeting contractual agreements is just good practice and may establish relationships and grow your business.
What happens, however, when your good intentions go awry? You may inadvertently find yourself in breach of some part of a contract, putting your business at risk. To protect your business from the potential harm from a breach of contract, it is essential to understand what constitutes a breach and your options if one occurs.
What is a breach of contract, and what are the consequences?
A contract is a legally binding agreement between two or more parties. A breach of contract occurs when one party fails to uphold their end of the deal. This can happen for various reasons, such as failing to provide the agreed-upon goods or services, failing to pay the agreed-upon price or otherwise breaching the terms of the agreement.
The consequences of a breach of contract can be significant and may include damages and financial penalties, as well as damage to your reputation.
What are your options if you find yourself in this situation?
If you find yourself in a situation where you have breached a contract, you have a few options. First, you need to try to determine if the breach is material (consequential) or immaterial. An immaterial breach may not be a serious issue, allowing you to focus on damage control.
Second, you can try to negotiate with the other party to see if they are willing to forgive the breach and allow you to continue with the contract.
If the other party is not willing to overlook the breach, you may need to pay damages. The damages you will need to pay will depend on the severity of the breach and the contract terms. In some cases, you may also be required to terminate the contract.
When you have a conflict over a contract, trying to come to a new agreement can often be the best solution – and it can keep you out of court. Make sure you fully understand all your legal options.