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Business Disputes and Breach of Contracts

In the business world, disputes happen for a variety of reasons, including project delays, financial problems and personality conflicts. Business disputes can prevent the terms of signed agreements from being carried out, resulting in lawsuits for breach of contract.

Many types of business disputes end in civil actions for failure to fulfill a contract. A common scenario is one small business contracting with another for a service — such as a retail store ordering a new sign — and then refusing to pay because the work is viewed as substandard or late. If the parties cannot reach a solution on their own, they may end up telling their story to a judge.

What Constitutes Breach of Contract?

As a business owner, you agree to certain obligations when you sign a contract. If you or the other party fail to fulfill any of the requirements of the agreement, a breach of the contract has taken place. A number of types of actions — or failures to act — can constitute breach, including:

  • Failure to perform the contracted service within the specified time frame.
  • Failure to perform the contracted service as described.
  • Failure to pay as agreed.
  • Interfering with the ability of the other party to fulfill the contract.

Contracts typically end when both parties have fulfilled their obligations as laid out in the document. It’s not uncommon, though, for one party to fail to fully complete all portions of the contract. Contracts can be breached in part or in whole.

A breach of contract lawsuit must prove several elements to be successful:

  • The written agreement must be valid and must include essential components like an offer, acceptance and mutual consent of the parties. Verbal contracts can stand up in court, but certain types of contracts must be in writing.
  • The plaintiff in the case must demonstrate how the defendant breached the agreement.
  • The plaintiff must demonstrate that he or she met all requirements of the contract.
  • The plaintiff must have provided notice to the defendant of the contract breach.

Defenses Against Breach of Contract

If you’re sued for breach of contract, you can fight back. Your business attorney may use one of the following arguments to defend you against the allegation:

  • The contract is not valid because the plaintiff deliberately neglected to disclose vital information or made a false statement.
  • The defendant was compelled to sign the contract by threats, physical force or undue influence of the plaintiff.
  • Both parties made mistakes in the contract.
  • The statute of limitations for initiating an action has expired.

If your attorney can present convincing evidence of any of these defenses, the contract may be thrown out as invalid.

Legal Contracts for Small Businesses

By working with an experienced small business contract lawyer to draft effective agreements, you take significant action to avoid a later breach of contract lawsuit. Contracts are legally binding, and they play a role in nearly every aspect of business — including agreements with vendors, contractors, employees, customers, landlords and tenants.

Contracts must be binding for both parties. If one party does not fulfill the terms of the contract, the other party can use legal remedies to sue for rightful compensation. Your attorney will play an active role in every phase of creating, negotiating and executing a contract, including the following actions:

  • Assessing the proposed business arrangement and envisioning possible future scenarios.
  • Negotiating with the other party to reach terms amenable to both sides.
  • Creating and formalizing a written agreement.
  • Enforcing contract requirements that are not fulfilled as agreed.

Remedies for Business Disputes

In some cases of alleged contract breach, parties can come to dispute resolution through mediation or arbitration. When negotiating doesn’t work, however, a case may go to court. If you sue another party for breach of contract, you may be entitled to one or more possible remedies:

  • Damages, or a monetary award, can be compensatory or punitive. In addition, a court can award nominal damages when a breach is proven but no loss of money occurred and liquidated damages identified within the terms of the contract.
  • When a contract is unique and monetary damages may not make the plaintiff whole, a court may award specific performance — a requirement that the defendant go through with the terms of the contract.
  • If the defendant has received a benefit from the contract, a court may cancel the contract and allow the plaintiff to sue for restitution — or restoration of the plaintiff’s state prior to the contract.

Work with an Experienced Small Business Contract Lawyer

If you’re involved in a commercial dispute or a breach of contract lawsuit, consider working with a knowledgeable small business contract lawyer who can protect your interests. For a consultation with an attorney, please contact Gertler Law Group, LLC.