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The steps you need to take to handle a contract dispute

On Behalf of | Jan 8, 2021 | Business Law

When an employee, supplier, vendor or other business fails to uphold their contract with your company, problems can quickly follow. You may not have enough supplies to continue operations at your business or may have machinery that doesn’t function because you can’t get the necessary repairs.

Contracts are meant to protect you and your business from unpredictable issues, but they depend on both parties fulfilling their obligations. When the other party involved in a contract doesn’t perform as agreed, what steps should you take to resolve the issue quickly and effectively?

Advise the other party of the breach of contract 

Not every breach of contract is an intentional act. Sometimes the other party just forgets or doesn’t understand their obligations under your agreement. Reaching out to them informally at first can be a gesture of goodwill.

If they don’t respond quickly, you may even want to send a written, formal notice about how they have breached the contract. In some cases, realizing that they haven’t done their duty can be enough to motivate the other party to deliver the goods or perform the necessary services.

Prepare for litigation but push for negotiation

If the other party doesn’t quickly resolve the issue, you should move forward with the assumption that they will be contentious about resolving the issue. You can seek negotiations outside of court, but you should immediately start pursuing a legal remedy if possible. Mediation and arbitration could help resolve the issue, but you may need to litigate despite your best efforts.

Going to court is often the final step in a breach of contract dispute. The other party may not want to have a court record about their failure to perform or may want to avoid the expense of litigation. You may be able to reach an agreement through negotiations partially motivated by the possibility of going to court.

If you can’t reach an agreement or if the other party continues to avoid responsibility, litigation may be necessary. Even if you have documented your conversations and the breach of contract, you will likely be in a good position to ask the court to enforce the contract, to require specific performance of the other party or to negate your obligations in order to refund any payments made for goods and services not received.