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What to Do When Someone Breaches a Business Contract

Contract Breach

Contracts are an important part of any business relationship. They are the basis for establishing the expectations of both parties involved in a business transaction. When someone does not follow the contract as it is laid out, you may need to seek legal counsel to recover damages to keep your business moving forward. Here is what you should do if you believe someone has breached a business agreement.

Step 1: Determine Whether a Breach Was Made

The first step in handling a breach of contract is to review your current agreement and determine what kind of breach occurred. During this process, you will want to assess the contract’s validity and ensure it is legally binding.

In Florida, legally binding contracts must feature three distinct elements:

  • An offer (the service or product that is exchanged).
  • Consideration (the value of that product or service).
  • Acceptance (usually a signature or other acknowledgment, like putting down a deposit).
  • It is not mandatory that the contract be in writing. However, without a written contract, it is often difficult to prove by competent evidence that the two parties actually had a conscious agreement (a meeting of the minds) and that a specific offer, acceptance and exchange of consideration occurred. 

Once you confirm that the contract is legally binding, you will also need to determine whether it was a material breach. Material breaches occur when the other party fails to fulfil an essential element of the contract and causes significant harm to your business.

Step 2: Attempt to Resolve the Breach Between Both Parties

Before seeking legal action, you should attempt to get the other party to follow the terms of the contract. Notify the offending party to make them aware that the contract is not being followed and ensure they have everything they need to deliver the product or service as stated in the original agreement. Keep track of all communication between you and the product or service provider, and actively work together to resolve the issue on your own. If the other party fulfills their end of the contract as desired, no further action is needed.

Step 3: Seek Legal Representation

If the other party still does not uphold their end of the contract or they fail to communicate with you in a reasonable time frame, it may be time to seek legal counsel to help recover damages caused by the breach of contract. An experienced business attorney will work with you to help both parties fulfill the obligations stated in the agreement.

Step 4: Determine Damages

There are different types of damages you may be able to recover once a breach of contract has occurred:

  • Direct losses caused by the breach of contract. Example: Delivering a damaged product or failure to pay the agreed upon consideration.
  • Damages directly resulting from the breach. Example: The cost of completing a contract after a party has failed to perform.  Or the cost of repairing a defective product.
  • A full refund of consideration paid when the breach was so significant that it voids the contract entirely.

Your attorney will send a formal letter to the other party notifying them that you have legal representation, the contract was breached, and that you intend to seek compensation for damages. The letter will also specify what kind of damages you wish to pursue.

Step 5: Settlement

The last step after a contract breach is to settle. The quickest and least expensive way to reach a settlement is to work with your attorney and the other party to negotiate together. If this does not work, you may need formal mediation to resolve the issue. If mediation fails, you will need to bring the case to court to have a judge make a final decision.

Peppler Law, P.A.: Oviedo Business Attorney

Contract breaches can slow down your business and cost you a substantial amount of time and lost profit. Protect your business from a potential breach of contract by contacting Peppler Law, P.A. We will work with you to help you receive damages for any contract breaches and guide you through the process of negotiating with the other party. Call our office at 407-307-3108 to speak with experienced business attorney Thomas R. Peppler today.

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