What to do if another business breached the contract

It is a commercial reality that most business owners will need to accept sooner or later; that eventually you will enter into an agreement with another business that breached the contract you had. This scenario leads to a dispute and can occur in any business relationship. This dispute can arise with a client, a supplier, or any other party with whom you conduct business.

The large majority of contractual disputes are resolved quickly and without any problems, and the parties, without further adieu, carry on with their contractual duties. There are, nevertheless, some contracting parties that will inevitably fail to meet their contractual obligations, which can lead to a breach of the contract.

It is important that you consult a contract lawyer whenever you believe that another party has in some way breached their obligations under a business contract.

Look at the terms of the contract

To work out whether either party has in fact breached the agreement, it is essential that you look closely at the terms of the agreement, as well as the way the contract was constructed. The most fundamental components of a contract are usually the duties that form the crux of the contract, and the timeline for completion of the different stages of the agreement.

When you have negotiated with the other party how you wish the contract to be constructed and what terms each party wishes it to contain, a contract lawyer should retained to assist with drafting these terms. Small business owners should make a habit of expressing as clearly as possible the performance requirement of the contract. This means expressing all of the contractual obligations that need to be satisfied for performance to be satisfied.

Determine if there has been a breach

Typically, a breach of contract can occur in two ways:

• When one party fails to carry out all, or some, of its contractual duties; and
• When one party anticipates that it will not be able to carry out all, or some, of its contractual duties.

When does an “anticipatory breach” occur? It can occur when one party states to the other party that they won’t be able to meet the performance obligations of the contract. It can also occur in a more implicit way, such as when the conduct of the other party gives the impression that the terms of the agreement will not be satisfied.

How to deal with a breach

At times, the breach will occur because confusion as to the specific performance requirement has arisen between the parties or on the basis that the contract was not constructed effectively. Normally, these types of disputes can be resolved without too much hassle. Sometimes, however, the contractual agreement cannot be recovered and the dispute will lead to a Court deciding to terminate the contract by discharge. This means that you may have a right to pursue the other party for damages for the loss suffered as a result of the breach.

When another party breaches the agreement, you have a couple of options. You may either terminate the contract by explicitly communicating these intentions to the other party, or you may go ahead with the agreement and impose specific performance criteria on the other party.

That being said, if it is not possible to carry out the contractual obligations of the agreement, a Court may choose to discharge the contract.

Conclusion

If you think another business has, in their commercial dealings with you, breached the contract, you need to speak with a contract lawyer to determine whether or not this is in fact the case. Once you have worked out what the breach is, you can decide whether or not you would like to terminate the agreement and pursue the other party for damages, or whether you would like to impose specific performance criteria on the other party instead.

For assistance in responding when a business breached the contract, contact LegalVsion on 1300 544 755 and speak with one of our team of contract lawyers to receive a fixed-fee quote on advice