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A dispute with a supplier can bring your whole business to a grinding halt. Manufacturing and production both particularly rely on smooth relations, quality materials, and on-time delivery from every vendor that your business works with. What happens when a supplier breaches their contract? How can you protect your business?
Breach of Contract
A breach of contract is when a party to a contract doesn’t perform as promised in the contract. A contract is broken when:
- One or more parties refuse to perform promises under contract
- One or more parties do something prohibited by contract
- One or more parties prevent another party from performing its contractual obligations
There two kinds of breaches; material and immaterial. A material breach is a total breach, which is very serious, whereas an immaterial breach does not have to entirely break the contract.
What Your Attorney Needs To Bring To Court
If a material breach happens to you, you should get the help of a breach of contract attorney. Your attorney will need a few things if they are going to litigate a breach of contract case successfully. All of these items will usually be present in your original contract:
- Specific examples of the material breach of contract
- Specific examples of the damages caused
- A definition of expected performance standards
- Written notice of breach of contract
In order to show which party is at fault, you should have correspondence that shows that all parties were made away of the breach, and documentation of actions that were taken to sort out the breach.
How To Avoid Breach Of Contracts
Many breach of contract cases happen due to miscommunication. The best way to stop this from happening is to communicate as clearly as you can. Communication problems usually come up in partnerships where one party is not well-versed with what the other party does.
Each party must clearly communicate what obligations are laid out in the contract and ensure everyone involved knows when these obligations need to be changed or delayed.
To avoid a breach of contract, you must:
- Understand the contract
- Follow the contract
- Create a documentary trail of communications and activity
- Be careful when creating documents, including emails
Anything in writing can be used in a breach of contract case. All your employees should know this before putting anything on paper or on a computer. If you think a breach is coming, you could also record phone calls or meetings.
Disputes with a supplier or vendor cause big problems for your business. With better and more effective communication and making an effort to understand and be understood, a lot of these disputes can be solved before a breach of contract occurs. With this effort, you could still come up against immaterial breaches, but these can be sorted out much more easily.
However, if a material breach does happen, if you have a tight contract in place, a history of clear communication from you and written documentation, you will have a better chance of success.