Large corporations are not the only businesses that may need to address breach of contract issues. Small companies also run the risk of other parties backing out of signed contracts, which can have significantly negative effects.
An agreement you enter into with another party can be breached in several different ways. The other parties may fail to perform their duties in the specified manner, perform late or incomplete services, or fail to perform at all. Breaches of contract often occur because of financial issues or project delays.
A court may find the breach to be material or immaterial, depending on the type of services the other party was expected to perform and the damage it caused your business.
If it’s clear that the other party breached the agreement or did not complete it to the contract’s specifications, you may seek monetary damages from the breaching party. Businesses can usually settle these issues out of court, but in some cases litigation may be necessary. To pursue a workable remedy, you need to prove certain elements:
1) You must have entered into a legitimate contract. You must demonstrate that your business and the other party entered into a contract in full agreement regarding what it would take to fulfill the contract. Both parties must have been legally allowed to enter into such a contract, and each party should have pledged something of value — such as goods, services or money — to show good faith.
2) You must have acted in accordance with the contract. If your business has not carried out your end of the deal, it could affect your ability to seek compensation for damages.
3) The contract must have been materially breached. You should be certain that the other party has broken the agreement. You should also inform the party of the breach before taking legal action.
4) Damages. You must have sustained measurable damages.