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2 ways a breach of contract lawsuit can benefit a business

On Behalf of | Feb 19, 2023 | Business Law

The contracts that you sign with a business, a worker or an independent contractor will influence how your company operates. You can control your costs, guarantee the delivery of specific products and carefully manage the expansion of your workforce with the right contract terms.

The unfortunate truth is that not every individual or organization that signs a written agreement with your business will uphold their end of a contract. A material breach of contract wherein someone fails to provide services or deliver materials might leave you without the staffing or supplies you need to keep your company operating.

Such a failure could cost you thousands of dollars or prevent you from fulfilling another contract. You might need to take the other party to civil court if they refuse to fulfill their obligations to your organization. Thankfully, filing a breach of contract lawsuit may be able to help your company in significant ways, if litigation becomes the best way forward.

1. The courts can compensate you for your losses

You can potentially go to court and ask a judge to hold the other party accountable for any losses that they’ve caused through their failure to follow through with their contractual obligations. A civil court judge can award your organization damages when there is a verifiable financial consequence for someone’s contractual failings.

Contract-related penalties that your company has incurred, wages paid while a production line idled or extra costs incurred to secure materials at the last minute could also constitute recoverable damages after a breach of contract. In addition to direct damages, a judge could also award you any kind of financial penalty that you agreed to in the contract but that the other party has refused to pay thus far.

2. Your claim can lead to contract fulfillment

One of the solutions that judges can employ in a breach of contract scenario is that they can order specific performance from the other party, thereby forcing them to fulfill their original obligations to your business.

Although specific performance isn’t always an ideal solution when nonperformance had to be remedied by seeking another supplier, for example, in cases where you still need delivery of products or the final touches on a project, requesting this order could be the easiest solution.

For many organizations dealing with a breach of contract issue, notifying the other party about an intent to take them to court might be enough to push them into compliance. A large number of business-related lawsuits end up settling before any hearings actually occur. Taking action in this way is often necessary, especially when the party in violation of the contract fails to communicate or correct their oversights.

Holding people accountable for how their contract breaches damage your business can help minimize the damage and teach them an important lesson about following through on their promises.