Breach of contract lawsuits make the news headlines when the amounts of money are big.
Breach of contract lawsuits make the news headlines when the amounts of money are big enough or if the falling out between the parties has enough salacious details. People love to read about temperamental celebrities who embarked on a business venture together, only for things to blow apart spectacularly. Most breach of contract disputes are more mundane, both in the terms of the contract and in the breach. This means that breach of contract disputes can happen to you, even if you are a small business owner. While it is not possible to guarantee that things will go the way you think they will when you sign the contract, most breach of contract litigation is preventable. The key is to find solutions to the breach before the dispute makes it to the courtroom, or better yet, to write them directly into the contract. For help writing or interpreting a business contract or dealing with a breach of an existing agreement, contact an Arizona business law attorney.
The Ideal Business Contract Has Plenty of Exit Ramps
When two parties who have signed a contract together disagree about anything about their existing agreement, the first thing both of them should do is reread the contract they have signed. The ideal business contract includes provisions that indicate the required response to almost any complicated situation imaginable. For example, the following provisions in a contract can help prevent breach of contract situations and can make them easier to resolve if they arise:
- Specific and itemized lists of the obligations of each party
- Procedures for renewing the contract, if it is renewable
- Procedures for early termination of the contract
- Force majeure clauses, which list the situations where it does not count as a breach of contract if the parties do not fulfill their contractual obligations, such as natural disasters and supply chain disruptions over which the parties have no control
- Procedures for notifying the other party of a breach of contract
- Situations that render the contract invalid
- Dispute resolution clauses, including which disputes have jurisdiction to rule on disputes arising from the contract
Even though they might seem like boilerplates, which are less interesting than the parts of the contract that talk about how much money you get and when you get it, dispute resolution clauses are among the most important provisions of a business agreement. Even if you do not request any other changes to the contract, and even if you cannot imagine anything going wrong with the contract you are about to sign, you should ask the other party to modify the dispute resolution provision so that the courts of Arizona have jurisdiction over contract disputes, if this is not already what the contract says. Arbitration clauses are insidious because they take away your right to resolve disputes about the contract in court. Be especially aware of arbitration clauses in contracts between an individual and a business because the individual is always at a disadvantage in these arbitration settings.
What to Do if the Other Party Breaches Your Contract
Hindsight is 20/20, but if the party you have signed a contract with breaches your contract, you must work within the framework of the contract you signed, not the contract you wish you signed. Follow the dispute resolution measures, and ask a business law attorney for advice. If the breaching party proposes solutions that are not listed in the contract, it is up to you to decide whether to accept them.
What to Do if You Cannot Fulfill Your Contractual Obligations
The best time to deal with your inability to fulfill contractual obligations is before they cause the other party to incur financial losses. If you cannot meet a deadline, let the other party know as soon as possible; they will be more willing to negotiate a new deadline at little or no penalty to you if you let them know far enough in advance to give them time to find a workaround. If you know that you cannot abide by most of the terms of the contract, following the terms of early termination is far less financially deleterious to you than being the defendant in a breach of contract lawsuit. Negotiation can solve most problems in business, and by taking the initiative to negotiate, you can mitigate your financial losses.
Contact Singular Law Group About Business Disputes
A business law attorney can help you if your company has suffered financial losses because of a breach of contract. Contact Singular Law Group PLLC to set up a consultation.
An Arizona business law attorney can help you draft airtight business contracts and resolve breach of contract disputes.
