No matter how well an owner runs a business and how much due diligence they exercise, contract disputes will occasionally occur. It may involve a customer, a vendor, an employee or a partner. They may accuse the owner or business of breach of contract and even file a lawsuit. Not all lawsuits end up with a judge’s ruling, nor does filing the lawsuit justify the plaintiff’s claim. Still, a business or owner must defend their professional and legal interests when accused of a breach.
Two types of breaches
Contracts cover many types of business agreements, but there are two common legal categories for breaches:
- Minor breach: This involves the defendant not meeting the terms outlined in the agreement. Typically, it involves late delivery of goods or services. The plaintiff may have a reason for the late delivery that has nothing to do with their job performance. There is no serious harm to the plaintiff, and they will still need to pay.
- Material breach: This involves failing to deliver agreed-upon goods and services or substituting them for a lesser product at the same price. The plaintiff seeks financial damages because the breach caused substantial harm in successfully conducting their business.
Defending yourself against a claim
The defendant can mount a defense, claiming such grounds as:
- The plaintiff misrepresented themselves.
- The plaintiff used fraudulent means to secure the agreement.
- The terms were impossible to meet.
- The contract had an error that the plaintiff knew about.
- Performance would violate public policy.
Resolving the matter
Sometimes litigation is the only way to settle a dispute once and for all, but resolving the matter with a business partner often involves resolution outside of court. With the help of an attorney, the two sides negotiate a solution acceptable to both sides. This alternative may preserve a mutually beneficial business relationship and/or avoid the time, expense and distraction of going to court.