McKown Bailey

Where Others See Obstacles, We See Opportunities

  1. Home
  2.  → 
  3. Business law
  4.  → Your rights when another business breaches your contract

Your rights when another business breaches your contract

When you reach an agreement with another company, whether you intend to sublet part of their space or receive routine chemical deliveries from them, you expect that they will uphold their side of the agreement.

The entire reason you executed a contract is to make your agreement binding and ensure that you understand the terms of your arrangements. Despite having a written record of your agreement, the other party could fail to deliver the goods or provide the services that they promised.

When another business breaches its contract with your company, that failure will affect your business operations adversely. What rights do you have when another company fails to uphold a contract with your business?

You can invoke any penalty clauses you included

Your contract can protect you from the financial losses you might experience due to delays or non-performance. Some businesses that have had suppliers or vendors breach a contract before will protect their profit margin by including penalties that apply if the other business breaches the agreement.

If there are late fees or non-delivery penalties included in your contract, you can send an invoice to the other party along with the letter notifying them of the alleged breach.

You can file a civil lawsuit

If the other party does not respond favorably to your initial attempts to resolve the breach, then you may need to take more aggressive steps. Filing a breach of contract lawsuit does not necessarily mean you will go to court. The majority of these cases still settle outside of court.

When you initiate a legal claim, you let the other party know that you intend to aggressively pursue a resolution to the matter, which can motivate them to cooperate with you. If they want to stay out of court, then they may negotiate a settlement with you or fulfill their contractual obligations. If they still don’t follow through with their written promises to your company, then a judge may ultimately hold them accountable for the breach and may even award you damages.

Understanding what steps you can take in a breach-of-contract situation will help you protect your business and hold others accountable for the impact of their failures on your company.