Draw the Law: Contract Disputes, Breach Remedies – Let’s Talk!

So last week I gave an overview of options you have to fix a breach in your contract.  Today, I will briefly go over one of your first, and generally speaking should be your initial approach – communicating with the other side.

The Practical Approach: Re-Opening Communication

Generally, when people do not do as they promised, such as making it on time for delivery of goods or services, a break down in communications begins.  The side that did not receive what they requested or paid for becomes upset and the breaching side for one reason or another stops communicating.  Consider the most optimal outcome if this move is successful: a) you have rectified the breach; b) it was inexpensive, as it only cost you a little time to phone call, email, or send a letter; c) and you gained invaluable information about how the other side operates.

Understanding the Other Side

Talking to the other side may only cost you a email or phone call, but you also will find out why they breached the contract, may be it was need for more time or their suppliers did not deliver.

The breaching party may have had several reasons for the breach: 1) they may have needed more time; 2) their suppliers or vendors breached their contracts with them and did not deliver; 3) they had an emergency and chose to break your contract over a more valuable one; 4) or they bargained too low and wanted a higher price.

While, I understand that situations 3) and 4) may be unpalatable to you personally, the reality is that businesses do have to make calculations.  However, that does not mean you ignore how the breaching side conducted itself in this situation.  If you do renegotiate or continue to use their goods and services in may be important to up the controls in future contracts to prevent the same breach from happening.

Do I Need a Lawyer?

In this situation, you may be quite capable of renegotiating your contract. However, in some cases having a lawyer to negotiate on your behalf and getting the other side to stipulate to your demands due to their breach can be beneficial.  You have to judge for yourself the situation and temperament, but before you do anything you could always call your lawyer and get some ideas on how to go over and things to ask for.

You can always form a new contract, so long as both sides agree, it may prove helpful to have a lawyer draft this new contract (which is still less costly than a lawsuit).

If it is a sophisticated deal and you have proposed a new way to handle the deal it might require you to have something drafted a “new contract” to replace the old.  In legal terms, you have a situation that requires an accord and satisfaction, where the creditor is willing to accept a lesser amount due or new way of handling the transaction and the need to amend the original contract.

One Final Strategy for Negotiating: If You Can’t Get to Them, Go Over Them

Depending on who you are dealing with, let’s say they are the authorized regional supplier for the sale of canned meat in the islands, you may have a better time dealing with the corporate office who grants the supplier the authority.  You can try to convince the corporate office to punish or force the nonresponsive, breaching supplier back to the table.  It may be telling them that the supplier is damaging their brand in the region by breaking contracts or that they are not meeting the company’s standards. It just depends on the leverage and relationship between the supplier and the corporate office.

In today’s economy, where a lot of people resell or are authorized vendors on behalf of a larger corporate entity that has their own contracts, it may be good to bypass the breaching party and talk to the entity overseeing them to get them to perform.

If that does not work, you can always do what’s called “self-help”, which will be discussed next week.

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.


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