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The problem with ignoring another company’s contract breach

On Behalf of | Jan 27, 2023 | Business-Employment

Maybe you hired another business to provide a service, such as handling a remodeling project at your offices. The date for the work to start came and went, and you never heard from the business. Eventually, you reached out to them to address their failure to show up, but they never corrected the issue.

Your first instinct might be to just find a new contractor to do the work. It can seem practical to just cut your losses when a business fails to do what it should according to your agreement. However, ignoring a breach of contract is a problematic decision for your company for two crucial reasons.

It establishes a dangerous precedent

Other companies and business owners communicate, and someone who has improperly handled a contract with your company could very well share information about your arrangements with another party.

That might make you a target for unscrupulous parties and put you at risk of future defaults as well. By enforcing your contracts through appropriate means, you reduce the likelihood of others intentionally targeting your business. Additionally, consistently enforcing your contracts will help you avoid claims by the other party that your one-time enforcement is inappropriate or somehow discriminatory.

Their failure may have had consequences

Maybe you had to delay a renovation project by several weeks and therefore also delay a reopening or product line expansion. Perhaps the other party’s failure to provide materials affected your contract with another business and forced you to pay a premium price for materials elsewhere so that you could still fulfill your obligations to your clients.

When they are verifiable financial consequences related to another party’s breach of contract, you may have grounds to request damages in civil court. Receiving damages will both properly compensate your business for the effects of someone else’s failures and serve as a consequence for the other party to hopefully deter them from engaging in such practices again in the future.

Of course, before you take the other party to court, it is usually important to properly communicate with them and give them an opportunity to correct their previous breach. Sometimes, formal notice of your intent to take legal action provided by your attorney could be sufficient to prompt another business to fulfill its contractual obligations to your organization.

Even if your communications do not lead to a swift resolution of the breach, it will at least help show that you attempted in good faith to resolve the issue with the other party. Taking timely action will be important for the protection of your business’s interests in a scenario involving a significant breach of contract.