Business & Commercial Newsletter
May 2012
What Rights and Remedies are Available if there has been a Breach of a Business Contract?
One of the issues that some small business owners may face is the reality that contractual disputes may arise either between a supplier, customer or another party with whom you share a contractual relationship with through your various business dealings. Most disputes will probably be easily remedied, and the contract will be completed without any further issues. However, there may be some rare instances where the party who you are dealing with is failing to perform their contractual obligations, which may result in a breach of the business contract. By understanding what options are available if you believe that another party is in breach of a contract, may assist you in making the best decision for your business.
What are the terms of the contract?
In determining whether or not there has been a breach of a contract, is dependent on the terms used in the agreement and the manner in which the contract was constructed. Perhaps the two most important aspects of a contract are the actions that need to be performed as outlined in the agreement, and the time frame in which the obligations must be completed.
To avoid complications, it’s probably a good rule of thumb for small business owners that the performance required in the contract are expressed as explicitly as possible, outlining in detail all of the obligations that need to be fulfilled in order to successfully meet the terms of the contract.
Has there been a breach of a contract?
Generally speaking there are two types of contractual breaches that can occur:
· a failure to perform all, or part of the contract
· an anticipatory breach where one of the parties will not fulfil the performance requirements of the contract.
An anticipatory breach can be expressed in clear terms when the other party makes a statement that they will not fulfil the requirements of the contract – or implicitly. An implicit anticipatory breach can occur if the actions of the other party may suggest that the terms of the contract will not be fulfilled.
What are my options if there has been a breach?
Some breaches might centre on a disagreement of the performance required, or a belief that the terms of the contract were not properly formed. In most cases, contractual disputes can be rectified quite easily. However, if the dispute goes to the heart of the contract, it may be terminated by discharge and you may have a right to sue for damages for any losses that may have been incurred due to the breach.
If you believe that a breach has occurred, you may elect to bring the contract to an end, or choose to continue with the contract on the condition that specific performance requirements are fulfilled. Please be aware that if you do decide to terminate a contract, the decision must be communicated clearly to the other party and must be unambiguous.
Alternatively, if the performance of the contract is deemed to be impossible, a contract may be discharged automatically.
Business contracts can be complicated with numerous issues that may arise between the parties. If you have any problems with a contract, please seek the appropriate legal help.
