Four Questions Your Small Business Should Ask When a Contract is Breached
Like a good story, all contracts have a beginning, middle and an end. However, there are several ways a contract might end. Hopefully, contracts are performed as expected. Some, however, are lawfully terminated. Others are breached. When a breach occurs, it is often unexpected, frustrating and possibly threatening.
Breach of contract is a legal matter. However, as a small business, you need to do some thinking before running to court. Consider the cost, risk and time consumption that litigation represents. While you are waiting for a decision from the court, business needs are not being met.
The main objective is to minimize disruption of your business. If you do make the decision to go to court, make sure it is an educated one. You will need to consult a small business attorney. In the meantime, you should ask these four questions before stepping foot in court:
There is no better place to start than the beginning. Find out why the other party decided it could not continue to perform. Ask if the terms were no longer acceptable. Maybe something better came along.
You may want to dig deeper, depending on your relationship with the business. Perhaps something happened in the business or in the other party’s personal life that has made it difficult to continue performing. There are so many more possibilities. Do your best to obtain answers through direct communication.
Are there any alternatives?
You will need to explore your options. Be creative. How important is the continuation of the relationship? If it is important, you can preserve the relationship by altering the terms of the agreement. Otherwise, it is a good idea to ensure an orderly wind-down of the relationship. You may need assistance in transitioning the contract to another party with the breaching party’s assistance. Consult a small business law attorney.
How do I protect my business?
Minimize your harm. If negotiations are going south, there are steps that must be taken in order to protect your business. Damage control is essential and immediate action is necessary. You must ensure the health of your business. It must be able to survive the impact of the breach. Know your legal options.
What are my legal options?
Legal options will mean hiring an experienced litigation attorney to provide advice and possibly represent you. A lawyer can assess the strengths and weaknesses of your contract. He or she will offer an analysis of how the facts will be analyzed by the court.
Proving a breach of contract is not always a slam dunk. You should expect your attorney to consider alternative claims and to break down the costs, risks, delays and the likelihood of success of your breach of contract claim in a court of law. These are the questions you need to ask before commencing litigation to recover for a breach of contract.
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