Six Generations Of Legal Advocacy

Andrew Lannon

What do small business owners need to know about breach of contract disputes?

On Behalf of | Jan 24, 2025 | Business Litigation

Business owners use contracts with suppliers to help better ensure a stable and reliable source of goods or services essential to their operations. These contracts can provide numerous benefits, including guaranteed pricing, consistent quality, and timely delivery schedules. By establishing formal agreements, businesses can better manage their inventory, plan for future growth, and mitigate risks associated with supply chain disruptions. When used wisely, these contracts can give business owners a competitive edge.

But what happens when something goes wrong? Business owners must often balance multiple contracts, and a breach can lead to significant disruptions and financial losses. A vendor may fail to deliver supplies by an agreed-upon date, or a client could refuse to pay for services rendered despite a signed contract. In these instances, business owners can take proactive steps to mitigate the negative impact of a breach.

Step #1: Review the contract

The language of the contract generally guides these disputes. This is why it is so important to review any proposed contract carefully. You can negotiate the terms and draft the contract to protect your interests.

When reviewing the document, review the contract for a provision the other party did not fulfill. Check the language used to see if the other party is in violation of the contract.

Step #2: Check for dispute resolution options

The contract itself may provide a method for resolving disputes. It may also be helpful to contact the other party. Many disputes can be resolved amicably through open dialogue.

If these steps fail to resolve the issue, consider the following legal remedies:

  • Mediation: A neutral third party can facilitate a resolution.
  • Arbitration: An arbitrator can render a binding decision to settle the dispute.
  • Litigation: There are instances when the other party will not cooperate. In these cases, it is best to take the matter to court to enforce the contract or seek damages.

Dealing with a breach of contract can be challenging, but understanding your legal options and obligations can help mitigate the impact on your business. By taking proactive steps towards resolution and compliance, you can safeguard your business interests and maintain positive supplier relationships.