Contract Breaches & Remedies
Your partner goes behind your back and talks with an exciting potential customer (PC), without telling you. Your client demands a refund and complains loudly on social media. Your key vendor misses three deliveries and won’t respond to emails. Sending a nasty email at 2 a.m., fighting back publicly on social media, or ghosting the other person won’t resolve the issue and will most certainly make it worse. So now what? Relationship disputes and contract breaches are part of doing business. Here are our suggestions, with increasing levels of conflict and expense, for how to address and resolve business disagreements.
Communicate with the other party. Don’t jump to conclusions and assume the other party is intentionally violating your agreement. Reach out and find out what’s going on and why. Often, clearing the air resolves the dispute and if not, at least you’ll better understand what happened and how significantly it affects your business. Plus, we lawyers love a paper trail (i.e., your email inquiry and the other party’s response, if any).
Consider a practical solution. You could write a nasty email or send a cease and desist letter but should you? Not yet. Start by thinking through other ways to solve the underlying problem. Is your vendor missing deliveries because of supply chain shortages? Can you order a slightly different product or change the quantities in each order temporarily? Not only will you meet your business’s needs, but you’ll build up good will with your vendor.
Negotiate to find a resolution. Sometimes you can find a solution to a breach, even if you’re the breaching party, through negotiation. Are cash flow difficulties making it difficult for you to deliver orders on time? Ask your customer to pay in 15 days instead of 30 and in return, you’ll discount her order 5%. If you’re a service-based business, listen intently to the unhappy customer’s complaints and offer her other services at no additional cost for a set time or offer to apply 15% of her past invoice to a new project.
Involve a neutral party to facilitate a compromise. You and your business have tried to negotiate a solution, but you’ve reached an impasse. Hold on litigation, for now, bring on a business coach, trusted advisor, or lawyer, for example, to help you reach a compromise. Often a person with legal or business expertise sees the situation with a fresh perspective and therefore, can help the stuck parties solve the problem.
You’ve talked and negotiated but the dispute lives on. It’s time to put your complaints in writing to formally document the breach and tell the other party clearly what you expect him to do and by when. For example, to the partner that talks to a PC without telling you, you might say that within 10 days, you need a written summary of the meeting, an outline of next steps with the PC, a commitment that she won’t talk with future PCs without telling you in advance, and an agreement that follow up with this PC will come from both of you.
Get a court or arbitrator involved. Sometimes despite our best efforts, disputes cannot be resolved and it’s time to seek court intervention. Note, time limits do apply to contract-related and other claims so work your way through our list of dispute resolution techniques promptly.
Best case scenario, you resolve the dispute on your own. But getting a lawyer involved starting at step 4 can expedite the process. Lawyers will also identify strategies and risks that you didn’t consider and can offer cost/benefit analyses, including of litigation, along the way. Plus, once you hammer out a solution, a lawyer will make sure it’s documented. And know, legal advice doesn’t have to break the bank. We offer budget-friendly Legal Subscriptions and flat fees for most services. Schedule a call now to talk about breach of contract options and to hear about our services and fee structure.
by Stephanie Melnick, attorney
