What To Do When There Is A Breach of Contract
Running a business is not all fun and games. There are a lot of elements involved and one thing you need to be concerned about is your contracts.
Contracts are legally binding but there will likely be instances where you or another party cannot fulfill your obligations. Maybe there are financial or weather-related issues involved.
In any case, what happens when there is a breach of contract? What should your first steps be? Here are some things to keep in mind.
Don’t Rush Into a Lawsuit
Not every breach of contract requires you to hire a lawyer right away and file a lawsuit. Taking legal action is costly and can result in delays. Because of this, you may want to consider alternative dispute resolution, such as mediation, which is much cheaper. Your focus should be on trying to preserve the relationship rather than automatically resorting to punishment.
Talk it Out
When there is any type of issue or confusion, be sure to discuss it with the other party first. Likely, there might be a simple misunderstanding or honest mistake. The other party might not even know they breached the contract or did anything wrong. Have an honest discussion about how to move forward rather than spending time and money on unnecessary litigation.
Assess the Damages
If you’ve tried talking things out and mediation has not helped, then it may be time to start thinking about legal action. Start figuring out all the damages involved. Think of all the costs involved. They may include unpaid invoices, lost revenue, and any additional costs from the breach of contract.
Try to Reach a Settlement
If the damages are significant, think about arbitration. Arbitration is not as costly as litigation, but it’s more formal and binding than mediation. A third party makes a legally binding decision and the arbitration process is usually much quicker than duking it out in court. However, there needs to be some cooperation on both parts. If there is a lot of contention
Consider a Lawsuit
If arbitration does not work, then you’ll need to assess whether or not it would be worth it to go to court. There are significant costs involved in going to court, so you’ll have to compare those to the damages you are owed.
Consider other factors. How well have you enforced contracts in the past? How much evidence is there in your favor? Are you still within the statute of limitations? What defenses does the other party have? If you think you stand a chance in court, then go for it.
Learn More About Business Contracts
Contracts are an essential part of any business. Make sure your contracts are legally sound so you can avoid breaches and other legal issues.
Orlando business contracts lawyer B.F. Godfrey from Godfrey Legal can help draft and review business contracts to protect your company. To schedule a consultation, call (407) 890-0023 or fill out the online form.