Following through with your business contracts is crucial to your reputation as a service provider or manufacturer. How much your customers or future clients trust you in large part depends on how thoroughly and consistently you follow through on your obligations to others.
Since you make a point of always following through on your contractual obligations to others, you probably expect other businesses and professionals to extend the same courtesy to you. Unfortunately, it is relatively common for contract breaches to occur.
Perhaps a vendor failed to deliver raw materials to your company, which led to you idling your production line for an entire day. Maybe you hired a construction company to help remodel your retail space, but the work is far from done and there haven’t been contractors present for days. A significant breach of contract can cost your company a lot of money. How do you resolve an issue where another party has not fulfilled their obligations to your business?
Provide formal notice
Some contract breaches are the result of internal issues at a company, but others are intentional. The party that should provide something to you feels as though they will face few consequences, if any, for not following through, so they don’t prioritize fulfilling their obligations.
You can protect yourself from such breaches ahead of time by specifically imposing penalties for late delivery or similar failures. Then, when the other party to a contract does not fill their end of the agreement, you can review the contract to verify a breach you hurt and then send written notice.
A formal letter to the other party can have a powerful impact and put compel them to take action quickly. If they know that you are aware of their failure and displeased with it, they may attempt to remedy this situation and preserve their business relationships with your organization.
Be ready to take legal action
If the other party will not voluntarily correct a breach of contract that occurred, you may need to go to civil court to enforce your written agreement. Breach of contract lawsuits can result in a judge ordering the other party to fulfill the contract, awarding damages or terminating your agreement so that neither of you will have obligations to each other in the future.
In many cases, filing a breach of contract lawsuit is enough to break up a negotiations log jam. Many such disputes and up resolved outside of court. When the other party knows you will take action to enforce the contract, they may more willingly compromise and correct their previous failure.
Taking the right steps when responding to a significant breach of contract matter can help you protect your company’s interests.