Dealing with people who fail to perform as promised is part of doing business. Most of your business activity is likely based on contracts between you and other parties, so broken contracts may form the majority of your legal woes. To bring a business lawsuit against another party for breaking a contract, you must be able to prove certain relevant details about the arrangement.
A Valid Contract Must Exist
To sue another party for breaking a contract, a valid contract must exist. Part of proving that a contract is valid is establishing the basic features of a contract. A valid contract requires an offer made by one party that was accepted by the other party. Something valuable must have been promised by both sides to demonstrate the parties' seriousness. The other party must also have had the legal right to enter into a contract.
The Contract Must Be Breached
Typically, you must wait until the other party actually breaks the contract before suing. There are certain situations where you can ask the court to prevent the other party from backing out of a contract if you have a reasonable expectation of that happening and special harm may result. However, an ordinary breach of contract case requires the other side to break the contract before you can bring the lawsuit. You also have to prove that the other party was the one who broke the contract and that you notified the party of the breach.
Your Business Must Have Followed the Contract
The law allows you to sue the other party for breaking a contract as long as you performed as promised. A person who breaks a contract first can't later sue the other party for failing to perform as a result. You must be the innocent party to get the court to enforce your business agreements.
Damages Are a Remedy for Breach of Contract
You can ask the court to award your business damages in a breach of contract lawsuit. Basic damages are designed to compensate you for your business' financial injury and the inconvenience that resulted from the other party's behavior. Occasionally, a broken contract results in no actual injury to your business. In that case, the court may award a small amount as a gesture. Some contracts contain a liquidated damages clause. This requires the party breaking the contract to pay a specific amount of money regardless of whether there's proof of actual injury.
A Business Lawyer Can Help
The law surrounding breaches of business contracts is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a business lawyer.