The basis of almost every business deal is a contract. As a business owner, you always want to ensure that you have properly drafted contracts that fully protect your rights. While a contract should clearly dictate the obligations of each party, many parties may still fail to fulfill their end of the bargain. A breach of any contract can result in substantial losses for your company, whether the contract was with a customer, a vendor, an employee, or another business. If you have experienced a breach of contract, there are steps you can take to try to solve the problem.
What To Do Next
- Discuss the matter with the other party. In many situations, the other party may not know that they breached the contract. If they failed to pay for goods or services, you might decide on a mutual solution involving a payment plan to fulfill the agreement without burning any bridges. As a business-to-business collections attorney, we can assist you in negotiations regarding non-payment.
- Understand your time limits. If you cannot reach a resolution by talking to the other party, you may need to take legal action to obtain relief. Texas has a four-year statute of limitations for most breach of contract claims. This may seem like a long time; however, the preliminary steps prior to filing a claim can take time, so always call an attorney as soon as possible.
- Calculate your losses. A breach of contract claim must request a specific type of relief. Generally, you will want to request money damages for the losses incurred as a result of the breach, and you should always have a skilled contract dispute attorney carefully calculate the value of these losses. In rare cases, when money will not adequately provide relief, you may request that the court order specific performance of the contract.
- Try mediation. You do not always have to head straight to court to resolve a breach of contract case. Sometimes, alternative dispute resolution tactics, such as mediation, can help you come to a mutually beneficial agreement without the cost and time of litigation. Mediation can also help preserve the business relationship, as it is a far less adversarial process.
What Happens if There is a Breach of Contract?
A good contract should always spell out your options in the event of a breach. This dictates how you may go about seeking legal remedies for your company’s losses if a breach occurs. While a contract may set out specific rights, you should always take certain steps to protect those rights. When you call our experienced Houston business law attorney as soon as you learn of a possible breach of contract, we can review the terms of the specific contract and assess your options.
A skilled business contracts attorney can help you prepare to file a lawsuit. For an initial consultation with attorney Andrew Weisblatt to determine the next steps to take, call 713-666-1981 today. Mr. Weisblatt has years of business law experience and can advise you on the best way to handle a breach.
If Someone Breached a Business Contract With You, Consult a Houston Business Lawyer
If you believe that someone with whom you have been doing business has breached a contract, the lawyers of Weisblatt Law Firm, LLC, can help. Weisblatt Law Firm routinely represents clients who are involved in business disputes and can help you with yours. If you face such a business situation, contact us at 713-666-1981 or through our online contact form.
A Breach of Contract Can Hurt Your Business
Many businesses—likely even most businesses—rely on contracts to conduct their business. Unlike personal relationships, most business relationships involve legal written contracts. Even retail stores, which for the most part have no formal contracts with their customers—except for those businesses selling big-ticket items that finance those sales, such as car dealers—rely upon contracts with the businesses that provide them with the elements needed to operate their business. The corner convenience store doesn’t have contracts with the people who walk in to buy a soda or a hot dog, but it has contracts with the companies that supply the store with the sodas and the hot dogs. Breaching those contracts—by either party—can have devastating consequences for both businesses involved.
How Does a Breach of Contract Impact a Business?
Businesses rely on predictability. Certainly, you cannot predict some things with total accuracy, such as how much of a certain product people will buy a year from now. But businesses have to make predictions of that kind every day. They take into account current economic conditions, expected future economic projections, and other data to build a model of their business needs in the coming months.
Based on those projections, a business enters contracts with other businesses, either to obtain the products or services they need for their business or to provide another business with products or services necessary for that business to operate. Whether the product is machine parts, raw materials, or a service such as payroll processing, businesses enter contracts to buy or sell those products and services to ensure that they will have a source or a purchaser that will enable them to continue operating.
What if a Breach Occurs?
If one party breaches the contract and declines to provide the product or services contracted for—or declines to purchase the product or services—the business on the wrong end of that breach is left in the lurch. Suddenly it’s left without a provider of something necessary to continue its business or, just as bad, left without a purchaser for the goods or services the business sells. This can result in a major disruption to a business, with at least some revenue suddenly and unexpectedly cut off because the business is left without a crucial element of what it needs to sell its products or services or is cut off from a market where it sells its goods or services. Either way, the business is left scrambling to find a new source or market necessary for its continued economic benefit.
What Can You Do if Another Business Breaches a Contract?
Obviously, if a business breaches a contract with your business by declining to perform according to the terms of the contract, you can sue. Initially, you will be scrambling to replace whatever opportunity the breached contract was supposed to provide so that you can stay in business. Suing is cold comfort—even if you win, you risk losing your business because of a breach of contract by one of your suppliers or purchasers. Assuming you are able to keep your business going, what can you hope to gain through a lawsuit?
The law is intended to put you back in the economic position in which you would have been had the contract been performed according to its terms. You can achieve this through a damages award in a number of forms, including:
- Liquidated damages, based on a contract term or sometimes by a court judgment
- Specific performance, where the court orders the breaching party to perform based on the terms of the contract
- Consequential and incidental damages, including foreseeable losses caused by the breach
- Compensatory damages, which reimburse actual provable losses.
There are other forms of damages available, and Texas law also allows recovery of attorneys’ fees if you win your breach of contract action and recover damages.
Contact a Houston Business Law Firm for Assistance Today
The Weisblatt Law Firm regularly assists and represents businesses of all types and sizes with contract drafting, resolution of contract disputes, and a wide range of other legal matters. We can assist with everything from business formation to litigation to dissolution. If you would like us to evaluate your situation, please call 713-666-1981 or contact us online for more information today.