Businesses use contracts to govern agreements between two parties. These documents are legally binding and contain a variety of information, including the business information, the scope of the agreement, and any terms that are necessary to ensure everything happens as intended.
Many business contracts work remarkably well and conclude with both parties having what they’re supposed to. There are times when the contract doesn’t work that way. These are times when one party doesn’t uphold its end of the contract, which is known as a breach of contract. These can occur in a variety of ways, but the result must be that one party doesn’t receive what they should when they should.
Not all breaches are large. In some cases, the breach is more of an inconvenience than a problem. These breaches may be settled by the parties talking to each other to come up with a mutually agreeable resolution.
Major breaches may lead to legal actions
Some breaches lead to significant damages for one of the parties. This may result in the wronged party taking legal action against the other party. In some cases, there may be limited resolution options because some contracts contain a clause that requires all problems to be resolved through alternative dispute resolution methods, such as arbitration.
When a contract is breached, both parties can suffer significant consequences. Because of this, it’s critical that both parties do what they’re supposed to do. Working with someone who’s familiar with the contract and the options that are open for resolving the breach may help to protect the business.