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What is a breach of contract?

| Jan 5, 2021 | Business Law

Contracts are legal agreements that companies often use to protect their interests. Contracts may be used with landlords, suppliers, distributors, independent contractors and employees, among others. They’re designed to spell out everyone’s obligations — and what happens if someone fails to meet their end of the bargain.

When one party fails to deliver on a contract as expected, that may be a breach. A breach of contract can be relatively minor, but it can also lead to devastating consequences for a business.

What should you do if your company is accused of breaching a contract?

The primary concern you have when your company is accused of breach of contract is to protect the company. With that in mind:

  • Look at your contract to better understand your obligations and the dispute resolution process that may be included in the agreement.
  • Contact your attorney so that you can discuss your situation, your perspective of events and your legal options.
  • Take steps to preserve any potential records that may be needed as evidence, including communications with the other party.
  • Do not discuss the situation with anybody else, including your employees, other business owners and so on.

Sometimes a breach of contract will be immaterial and essentially irrelevant. When the breach is more serious, however, you may need to take some quick steps to mitigate your losses. It is often possible to negotiate a resolution with the other party without heading to court. Your attorney can help you navigate the demands of the situation without losing sight of your business goals.