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Seek the right remedies if a breach of contract hurts a business

On Behalf of | Apr 12, 2022 | Business & Commercial Law |

Contracts help companies manage expectations, create predictable income streams and limit liability for daily operations. As a business owner or executive, you might enter into contracts with numerous parties.

From landlords and suppliers to clients and employees, there are many other parties that clarify their relationship with your company and your mutual obligations through written contracts. These agreements help ensure you have the staff, supplies and revenue you need to operate.

Contracts make your agreement easy to verify and easier to enforce if something goes wrong later. Although you hope that those who sign a contract with your company will respectfully fulfill their obligations, some people default or breach the contract they entered into with your business. When that happens, you will need to take action to avoid extensive damage to your company.

Breach of contract claims can lead to court

Provided that you have a valid and enforceable contract, you can take the other party to civil court if their actions have a negative financial impact on your business. Sometimes, getting served with breach of contract lawsuit paperwork will push another party into compliance with a contract. Other times, you will need to present your case to a judge.

If that judge reviews the contract and determines that it is valid and that the other party did, in fact, violate it, there may be several remedies available. You could have the judge release you from the contract. You could ask them to order specific performance, which is essentially a court order forcing the other party to follow through with their obligations to your business. You can also potentially ask for compensation for damages that you have suffered because of a breach of contract issue.

Better contracts can help in the future

When your company faces a noteworthy breach of contract issue, that conflict may be a sign that your organization would benefit from revisiting your existing contracts. Some companies add enforcement clauses that allow them to take action before going to court. Others may add penalties for non-compliance to help them avoid similar issues in the future.

Exploring the different solutions available in a breach of contract scenario that negatively affects your company can lead to the best resolution given the circumstances.

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