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What can you do when someone doesn't fulfill a business contract?

Doing business means handling a lot of different concerns at the same time. You need to balance the budget, ensure there is sufficient work to keep your staff working and constantly pursue new contracts and growth. You do your best to uphold your side of any deal or contract. After all, your profits and your reputation are on the line otherwise.

Sadly, it's relatively common for companies and contractors to violate or fail to fulfill the terms of a business contract. When that happens, it can leave your business in a difficult position. Thankfully, a written contract also provides you with a means of seeking restitution for that failure and its impact on your company.

Know your rights as the person dealing with a breach of contract

When you sign a contract with another party, you enter into a legal relationship. Both parties must fulfill the terms of the contract, whether it's completion of certain work, payment for goods at the time of delivery or a promise for future work together. You are both bound by the terms of the contract, barring issues that may void the contract altogether.

In some cases, for example, some kinds of consumer contracts must allow for a cooling-off period. Everything from reverse mortgages to home sales and debt settlement services contracts have a period in which consumers have the right to cancel their contract without legal penalty. For most business-to-business contracts, however, the other party will not simply have the option to cancel the contract without a valid reason.

How breach of contract can impact your business

Depending on the kind of business you run and the contract you signed, a breach of contract could prove devastating for your business. If you signed a contract requiring a vendor to provide raw materials or components needed for product creation in your facility and they fail to deliver, you could have to lay off staff. You could miss fulfilling your own orders and contracts, which could leave you in a legally vulnerable position.

A breach of contract could cost your company money, damage your reputation or even result in the loss of a contract or project that you needed to remain in business. When that happens, you have the right to bring legal action against the other party for failing to uphold the contract.

Negotiations and civil suits could help resolve the issue

In some cases, renegotiating with the other party can lead to a successful resolution to the situation. Other times, however, such a simple resolution may prove impossible.

You may need to ask the courts to step in. You may be able to ask the courts to enforce the terms of the contract. Barring that, you may have the option of seeking damages related to the breach of contract via a civil lawsuit.

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Dunlap & Seeger, P.A.
30 3rd Street SE
Rochester, MN 55904

Toll Free: 800-636-2689
Phone: 507-316-0628
Fax: 507-288-9342
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