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Breach of Contract Issues

Nov. 3, 2013

When you have entered into a contract with a business partner or a vendor and they fail to perform the obligations under the contract, a breach of contract has occurred. When one party goes against the terms of the contract, it makes it difficult or impossible for the other party to perform, and when this happens, action needs to be taken to prevent further financial damage.

To prove a breach of contract has occurred, a contract needs to state clearly what each party is going to do and the time frame of each action. Unfortunately, many contracts fail to list the specific obligations of each party, which then makes it difficult to enforce the contract should a dispute arise in the future.

Although an oral contract can be legally binding, a breach of such a contract may be difficult to prove in the future. For a business contract to be binding and legal, write down the terms of your contract and have both parties sign and date it. It is advisable to hire an attorney experienced in business contracts and litigation to draft your contract as the legal language needed for a formal contract is very important should a contract dispute occur. A quality business contract will prevent legal problems down the road.

Contract breaches are, of course, detrimental for both businesses and individuals as they waste time and money. Once a party in a contract indicates it is not going to perform its obligations, you can then immediately claim a breach of contract and seek recourse.

The law requires that a breach of contract be material and that it caused financial damage to the plaintiff, as well. If you plan to sue a party for breach of contract, the suit needs to meet certain criteria. You must prove that: the contract existed; the contract was broken; you lost money; and that the person or business you are suing was responsible. The compensation you may receive should you win your breach of contract lawsuit could be: compensatory damages; liquidated damages; punitive damages; consequential and incidental damages; and attorney fees.

Many times the actions you take for a breach of contract are stipulated in the contract. Some contracts contain arbitration clauses which require the parties to submit to arbitration before filing a suit. Carefully review your contract to understand any limitations or requirements before going to court.

When you are entering into a business contract or are considering filing a breach of contract suit, consult with an experienced contract litigation attorney. Using his experience and skills, your attorney will aggressively protect your interests and will take the necessary legal actions to resolve any business disputes you may have.