Tough Negotiation. Timely Resolution.

Enforcing a business contract after a significant breach

On Behalf of | Apr 22, 2023 | Business Law |

Maybe a vendor failed to make a scheduled delivery of raw materials, which led to a business idling its factory for almost an entire week. Perhaps a former employee engaged in unfair competition despite restrictive covenants in their contract with a company.

There are many scenarios in which a company may have a contract in place for its protection, only to have the other party to that contract fail to follow through with their side of the agreement. A breach of contract can cost a company thousands of dollars – or even more – by disrupting its operations or harming its reputation.

How can an organization enforce its contract after a breach by another party?

By initiating civil litigation

When one party has materially breached a contract, the other party may attempt informal communication or requests for resolution, only to end up ignored or rebuffed by the party that violated the agreement. When an individual or business does not indicate an intent to correct the situation, going to civil court is often the best option available.

Successful litigation can lead to a judge ordering specific performance and thereby enforcing the contract. A judge can also award the plaintiff damages for the financial consequences of the contract issue. In some cases, a lawsuit could lead to the invalidation of the contract so that the organization no longer has any responsibility to the party that has failed to uphold their end of the agreement.

By agreeing to negotiate or mediate

Many contract disputes and other business disagreements don’t end up in court even if someone files a lawsuit. It is often feasible for parties embroiled in a contract dispute to settle the matter amicably before their day in court.

Sometimes, the party in violation of the contract simply needs the motivation of knowing that the other party will follow through with enforcing the agreement and holding them accountable for their failures. Being willing to sit down to discuss a compromise either through direct negotiations or mediation can benefit those who would like to preserve their working relationship with the other party despite the prior breach.

No single approach works in every situation. An executive or business owner needs to have clear priorities and an understanding of their rights to properly resolve a contract dispute. Taking thoughtful steps to enforce a business contract can help to resolve a dispute between an organization and another party, whether in a collaborative or contentious fashion.