Entering into a legal business contract obligates all signing parties to fulfill their designated responsibilities. Despite best intentions, breaches of contract may occur. These breaches may happen due to unrealistic expectations, financial hardship or simple non-compliance.
If you face a breach of contract in your business, several options exist for seeking resolution.
Renegotiate the terms
Should one party realize they cannot meet the contract stipulations, consider renegotiation. Renegotiating specific clauses or restrictions provides the flexibility needed to realign the contract with current realities and capabilities. This maintains the business relationship while also establishing more reasonable expectations.
Demand performance
If the breaching party refuses to fulfill their contractual duties, demand that they uphold their end of the bargain. Issue a clear notification that their actions violate binding legal terms. Accompany that with a demand they immediately correct their nonperformance as outlined. This provides them a formal opportunity to resolve the breach on their own.
Seek compensation
Sometimes the efforts to motivate a resolution fail. In those cases, you should consider seeking recovery of damages. In other words, if they refuse to do what they agreed to do, the non-breaching party can sue to receive compensation. Base the amount you ask for on the actual losses or quantified damages associated with the breach.
No business wants their contracts broken. Should a breach occur, it can help to understand how to respond. Every business owner has options to seek compensation through renegotiation, demands for performance or formal legal action. These options provide the best possibility of preserving business relationships and interests.
