What Happens if There Is a Breach of Contract Between Businesses?

Contracts are created to help protect both parties from issues that might arise. Contracts can be created to help protect trade secrets, to help protect companies as they are created, and to help make sure that all parties know what their boundaries are and what they should and should not do.

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When two companies enter into a contract it is necessary that both keep to the terms of the contract in order to make sure that both parties are going to be satisfied and that both parties are going to be protected. In cases where a contract is breached, the business litigation process takes effect.

What are the Parts of a Contract?

Each contract is made up of five different parts, an offer, acceptance, consideration, competency and legal intent. It is important that when a contract is created that it is drafted and filed by a lawyer to help ensure that the contract is legal, valid and binding.

Contracts may also have clauses that state what happens when the contract is breached, what happens if both parties want to dissolve the contract, and what to do if the contract needs to be changed.

What Happens with A Breach of Contract?

In many cases, there are a range of different clauses that are put into place to help compensate or to help make up for a breach of contract. Some contracts have clauses included that outline what needs to be done by the company that breaches the contract and what should be done to make the contract either binding again or to forfeit it. When the terms of a contract are breached, the contract becomes null and void and neither party are held to the contract any longer.

This means that if one party breaches the terms of the contract as they have been legally stated, the company that is not in breach may withdraw from the contract leave the agreement all together. If the contract is breached and there are terms and clauses that state what happens in the case of a breach, then those terms would be instated, and the process would begin to right the contract.

A great way to think of this is to look at an example. Say that a contract has a fine associated with a breach of contract. Say that two businesses are entering into a contract to work on a project or on a product and both parties are told that they must keep the product under wraps until the date at which the product is going to be released to the public for sale.

Now suppose that one party lets loose word of the product or leaks a picture of the product before the agreed upon date. This is a breach of contract as secrecy was one of the terms of the agreement.

Now say that the contract has a clause that states if the contract is breached the party that breaches the contract must pay a fine to the other company. This means that the company that leaked the product would have to pay that sum to the other company in order to make sure that the contract is upheld. The other company, the one that did not breach the agreement, can then break the contract if they want and stop the contract all together.

What to Do if Your Contract is Breached?

If you are part of an agreement with another person or another company, and they breach the terms of the agreement that you have enter into, you can always look to break the contract and to start forward with legal proceedings. With the help of an attorney or with the help of a law firm that is able to take on the case and help bring it to a positive resolution. Your contracts are important, both parties should be held to the terms that they agreed to and if they are not, the contract then becomes void.

With the help of a lawyer, you can get legal help and can either dissolve the contract, move forward with damages, or you can move forward with changing the terms of the contract to better fit the new terms. With the right lawyer and the right case, you can handle contract breaches in a much easier and more streamlines fashion that you might have ever thought possible. When you enter into a legal contract, you are required to follow the terms that you have agreed to lest you be subject to legal action.

When a contract is breached you are subject to whatever damages are listed in the contract, and you are also subject to the contract being dissolved entirely. It is crucial that before you enter into any sort of contract you are able to fulfill the requirements of the contract, and you are able to stay true to the contract no matter what.

Breaching a contract is a big deal and those companies that breach them do need to be held accountable and do need to be chastised for doing so. The right lawyer can help you with all your contract needs.

Interesting related article: “What is a Lawsuit?