What Should Small Business Owners Do about a Breach of Contract?

Contract breaches are fairly common in the business world, but they can create a number of problems. Many business relationships have been ruined because of contract breach. The situation is especially frustrating when you are a small business owner and lack the resources to employ a team of attorneys to help you with your contract issues. What can small business owners do when a problem arises with a contract?

Has a Breach of Contract Occurred?

First, evaluate the situation. Contracts can be complicated, so sometimes what seems like a breach might actually be just a misunderstanding. Before taking further action, you need to determine if a breach has occurred.

The most important thing to assess is whether someone did not perform according to the contract and whether or not that non-performance had an affect on your business. Ask yourself, “Was there an economic impact on my business due to contract non-performance?” If so, this is considered a material breach. Material breach can put you in a position to sue for damages, but you will need to show the contract existed, was valid, was broken, and that it caused you harm.

What Should You Do Once a Contract is Breached?

Once you know an issue exists, it is almost always preferable to try to settle it with the other contracting party before taking legal action. Request full compliance with the contract and attempt to resolve the issue without taking the offending party to court. Contact them as soon as you believe there has been a breach to minimize the energy invested in resolving the issue. Your goal should be to settle the breach as efficiently as possible, but any settlement should be reasonable and should honor your rights under the agreement.

Too often, small business owners let too much time lag, hoping the issue will resolve itself without action. This is almost always a mistake. Taking action shows you are serious about the contract being honored and that you expect your business be shown respect. It is important to consult an experienced attorney quickly so that you can understand your rights under the contract, and what your course of action should be.

If you believe you are a victim of a contract breach or you have questions about a contract , we can help. Contact Miller and Steiert, P.C. for more information.