As a business professional, you deal with contracts on a regular basis. While most agreements will never wind up in a dispute, it's important to remember that this could happen at some point. From delays to financial problems, you never know what could lead to a breach of contract.
Before we go any further, let's examine what breach of contract really means. In short, when one party fails to live up to the terms and conditions of the agreement, it is known as a breach of contract. In some cases, this is the result of a simple misunderstanding. In this case, both parties can get together, discuss what happened and hash out the best steps for moving forward.
Conversely, there are situations that are much more complex. For example, one party may feel that the other has broken a contract, but the other party does not agree.
What happens next?
As noted above, not every breach of contract has to end up in litigation. In fact, it's best if both sides can negotiate on their own and reach a final agreement. In the event that this isn't doable, one or both parties may begin to takes steps to enforce the terms of the contract. Adding to this, it's possible to move forward with the idea of making a financial recovery.
If you find yourself tangled up in a breach of contract, you must first decide how much money is at stake. If it's a small amount, such as $3,000, you may be able to proceed in small claims court.
If informal negotiations don't work and you're forced to move forward with litigation, it's important to understand the type of damages you may be able to recover. These often include:
- Punitive damages. This is a payment that the breaching party is required to make as a means of fully compensating the other party.
- Compensatory damages. The end goal here is to help the non-breaching party reach their former position, as if the breach did not occur in the first place.
- Liquidated damages. These damages are those identified in the contract for the specific reason of a contract breach.
It doesn't matter if you do business in a big city like New York City or a smaller community, nothing changes the fact that you never want to be involved in a breach of contract lawsuit.
If you find yourself or your company on the wrong side of an agreement due to a contract breach, it's time to learn more about your legal options.