Did Your Company Breach a Contract? Follow These Steps

Businesses face a lot of issues, and some of them can be very costly. One of the last things any business wants to face is the possibility of a contract breach. A contract breach occurs when one party fails to fulfill their obligations under a legally binding agreement without a valid legal excuse.

If a breach has occurred, it could lead to a costly and time-consuming legal battle. That’s why it’s crucial that you take thoughtful steps when evaluating the situation. A careful analysis will help clarify whether a breach actually did occur and guide you toward the most effective path for resolution.

Gather All the Facts

Begin by collecting and verifying all relevant information. Rely on multiple sources to ensure accuracy. Steps to take include:

• Obtain the original contract and all amendments.
• Compile related documents: emails, reports, deliverables, payment records, and complaints.
• Speak with key individuals involved to understand the full context.
• Pinpoint when the breach may have occurred.
• Determine if the other party is aware of it and whether they are fulfilling their obligations.

Carefully Review the Contract

Avoid relying on instinct or non-legal opinions. Misreading or misinterpreting contract language can lead to costly errors.

• Have a qualified legal professional analyze the agreement.
• Cross-reference your factual findings with the actual contract terms.
• Identify relevant provisions to determine if a breach occurred or if the issue is simply a misunderstanding.

Identify the Type of Breach

If a breach seems likely, determine its nature:

• Material breach. A major failure that undermines the contract’s purpose, often allowing termination.
• Minor breach. A less significant violation that doesn’t prevent overall contract fulfillment; damages may still apply.
• Anticipatory breach. One party clearly indicates they won’t fulfill future obligations, allowing early legal action.

Examine Contractual Consequences

Review the contract for clauses that outline remedies and procedures for handling breaches. Key provisions include:

• Opportunity to cure
• Damage limitations
• Force majeure
• Dispute resolution
• Termination rights
• Notice requirements
• Injunctive relief
• Escalation processes
• Course of dealing

Evaluate Possible Remedies

Understand what the other party might seek if they pursue legal action. Some remedies include:

• Compensatory damages. These cover direct losses.
• Consequential damages. These cover indirect, foreseeable losses.
• Incidental damages. These are expenses from mitigating or responding to the breach.
• Liquidated damages. These are redefined damages set in the contract.
• Specific performance/injunction. These are court orders requiring action or inaction.
• Rescission. This cancels the contract and restores parties to original positions.

Figure Out the Best Step Forward

If your company did breach the contract, you need to act quickly to cure it. Consider how to approach the other party. Keep in mind that it’s better to show that you’ve identified and resolved the issue proactively. Offer remedies such as discounts and credits to foster goodwill and avoid litigation.

Contact a Breach of Contract Lawyer Today

A breach of contract can result in a major lawsuit. If you are threatened with a lawsuit, you need to take swift action.

A Bradenton breach of contract lawyer from Cahall Law Firm can help you understand your legal options and possible remedies. Fill out the online form or call our office at (941) 281-2019 to schedule a consultation.

Source:

legal.thomsonreuters.com/blog/what-to-do-if-you-think-your-company-breached-a-contract/