Companies enter into multiple agreements to adequately operate their business. Contracts with investors, vendors and employees are part of running the business. On that account, a breach in one of those contracts can interfere with business operations. Thus, it is essential to resolve the matter as quickly as possible.
Resolving the matter privately
When there is a breach of contract, it does not necessarily mean that the parties have to take it to court. In situations like this, the first step is usually for the contract parties to discuss the matter privately. If the reason for the breach is something unforeseeable or unpreventable, the likelihood that the parties will resolve the issue amicably is relatively higher. Consequently, the affected business can request their vendor to continue performing their obligation under the contract.
In case the vendor still fails to do their part of the agreement, the wronged party can enforce the breach of contract clause, which is usually included in business contracts. The clause may include penalties and interests to cover the loss due to the vendor’s failure to perform their obligation.
When a lawsuit is the remaining option
When contract parties fail to resolve the dispute privately, the wronged party can bring the case to court. Courts acknowledge valid contracts, though they rarely award damages to punish the defendant for breaching the contract. If anything, the courts can award compensatory, liquidated and nominal damages, to bring the wronged party back to the financial position they were in before the breach.
The case’s unique circumstances will tell which remedy is appropriate
Each remedy for breach of contract has its advantages and drawbacks. For instance, bringing the case to court can give the plaintiff peace of mind by having the court look over the case. However, this remedy can cost the business money and a major disruption of its operations.
If you are looking into possible remedies for a breach of contract, it is best to consider the case facts and your current financial standing. This way, you can choose a method that will protect your rights while aiming for minimal risks to your business and resources.
