What Business Owners Need to Know About Breach of Contract Lawsuits

 Posted on July 27, 2023 in Business Law

As a business owner, it is crucial to understand the legal implications of contracts and the potential consequences of violating a contractual agreement. If one party is accused of failing to meet their legal obligations, this can lead to contract disputes and, in some cases, lawsuits. By understanding the legal elements of a breach of contract and the potential remedies that may be available through litigation, business owners can take steps to protect their interests.

What Is a Breach of Contract?

In order to pursue a breach of contract lawsuit, certain legal elements must be established:

1. Valid contract

   A legal agreement that meets all applicable requirements must exist between the parties involved. To be valid, a contract must include an offer, acceptance, consideration, and mutual intent to be bound by the terms.

2. Breach

   The party alleging the breach must demonstrate that the other party failed to perform their obligations as outlined in the contract.

3. Damages

   The party seeking legal recourse must show that they suffered actual harm as a result of the breach.

4. Causation

   There must be a direct link between the breach of contract and the damages suffered.

An experienced business law attorney can consult with a business owner to evaluate the strength of a breach of contract claim and determine if all of these legal elements can be established.

Potential Remedies for a Breach of Contract

If a breach of contract is proven, there are several ways the issue may be addressed, including:

1. Compensatory damages

   The party who violated the contract may be required to pay monetary compensation for the other party’s actual losses.

2. Specific performance

   The court may order the breaching party to fulfill the contract terms and abide by their obligations as originally agreed upon. This is typically used when monetary compensation is not sufficient or feasible.

3. Rescission

   This remedy will cancel the contract, and both parties will be returned to their positions before the contract was signed. It is often used when the contract was entered into under fraudulent or illegal circumstances.

4. Reformation

   If a contract contains ambiguous or incorrect terms, a court may reform or modify the contract to reflect the parties' true intentions.

The specific remedies available will depend on the breach's circumstances and the non-breaching party's goals. A knowledgeable business litigation attorney can provide guidance on the remedies that may be available.

Steps Business Owners Can Take to Address Contract Issues

While it is impossible to eliminate the risk of a breach of contract completely, some steps can be taken to protect a business, including:

1. Clear and detailed contracts

   Business owners should be sure that all contracts are well-drafted, clearly outlining the rights, obligations, and expectations of both parties. Provisions may be included for dispute resolution and remedies in case of a breach.

2. Thorough due diligence

   Before entering into a contract, business owners should conduct thorough research and due diligence on the other party. It is important to verify their reputation, financial stability, and track record of fulfilling contractual obligations.

3. Document everything

   Business owners should keep detailed records of all communications, agreements, and transactions related to the contract. This documentation can be crucial evidence in the event of a breach.

4. Regular review

   Performing contract reviews on a regular basis can ensure that contracts will be updated and that their terms will remain relevant and enforceable. This is particularly important if there are changes in laws or regulations that may impact contracts.

5. Consult with an attorney

   A lawyer who is experienced in business law and contract litigation can provide invaluable guidance when drafting, reviewing, or enforcing contracts. They can provide valuable advice and help protect a business’s financial interests.

Contact Our Metro New York Contract Dispute Attorneys

If you need to address a breach of contract, if the other party to a contract has accused you of committing a breach, or if you need assistance with contract drafting and review, the experienced Westchester County breach of contract lawyers at Ivey, Barnum & O'Mara, LLC are here to help. We understand the complexities of contract law and can provide you with the guidance and representation you need to address these issues successfully. Contact us today at 203-661-6000 to schedule a free consultation and discuss your legal needs.