Every day, individuals and businesses sign contracts. You sign contracts to get a loan, sell your products to a specific supplier and even get a driver’s license.
Contract breaches occur when one party does not fulfill the obligations promised in the contract. This is what you can do if a breach of contract occurs.
Calculate your damages
Your first task should include determining how much the breach has cost you. Include payments you made, lost revenue and expenses.
Contact the breaching party
It is always best to open the lines of communication when you experience a breach. Your counterpart may have misread, misunderstood or made an honest mistake that resulted in breaking the contract terms. In addition, the breaching party may have extenuating circumstances, such as a delay in getting a supply they need to fulfill your order.
In the future, consider regularly contacting your counterparts and reviewing your contracts. During these meetings, you can review necessary changes, address potential issues and make sure you are all on the same page.
Consider arbitration or mediation
If you cannot resolve the contract breach, you may pursue a settlement through arbitration or mediation. In both cases, you both state your cases. However, a mediator guides productive conversation, while an arbitrator determines a legally binding outcome You may receive a settlement or contract adjustment.
If your damages are significant, you may pursue litigation immediately or after other options have failed. Consider your past relationship with the breaching party. Gather your evidence and check the statute of limitations. Prepare to defend your position and possibly lose the business relationship.
To get the best resolution to your breach, treat your counterpart with respect and fairness.