Just about every business in Louisiana is involved in some type of agreement, or contract, with other businesses. Whether buying or selling goods and services, contracts put agreements in writing and can outline specifics to that agreement, even in case of breach. But what is breach of contract? How might a breach of contract on behalf of a business partner affect your business?
Breach of contract is an action (or inaction) that violates the terms of two or more businesses’ agreement, usually on a bill of sale. For example, if Company A has promised to deliver 20 widgets to Company B by a set date and fails to meet their obligation in quantity or in time, that would be a scenario where a Company A may have breached their contract with Company B. Breach of contract is serious, because it can set up the wronged party to incur monetary losses that have a ripple effect of costliness. Essentially, it can cost the wronged party lots of money, especially if a company’s breach of contract delays the delivery of goods or services to the intended user.
Most any written contract between two or more parties has terms outlining what a party in breach of contract would endure if and when they breach the contract. Having these terms in writing, and signed and authorized by both parties, can make it easier to enforce penalties on the company who has breached contract. However, many businesses will often deny they are in breach or potentially litigate against enforcing the penalties of the contract. Depending on what clauses companies had written into a contract, assuming it’s valid, a company could end up litigating or arbitrating until a satisfactory conclusion is reached.
It can be very clear to a business entered into a contract if a breach of contract has occurred. However, it depends how this breach of contract affects their business if it is worth pursuing damages for losses incurred due to the breach. How the contract is laid out and what terms the companies agreed to can give clues as how to proceed. Every contract is different and should be treated as such.
Source: FindLaw, “Breach of Contract and Lawsuits,” Accessed July 3, 2017