An agreement between two companies, written and signed with contractual acceptance can be the start of something great. When multiple businesses work together, it can be a profitable and mutually beneficial experience. However, sometimes the relationship between two companies in contract with each other goes sour. What issues may arise between two companies to cause a contract dispute?
Usually the issues between companies arise because of a breach of contract on behalf of one or more parties involved in the agreement. The reason these agreements are drawn up in the first place is to ensure that all parties understand their contractual obligations and are able to meet those accurately and efficiently. When a company is in breach of contract, it means that they have not met their contractual obligations and that usually has a detrimental effect on the contract as a whole and the parties involved. Oftentimes, terms are built into the contract that outline next steps, or remedies that the company in breach must take in order to rectify the breach of contract.
While this might not make the other party completely whole, it is a way to build a positive relationship again with the company engaged in breach of contract. Remedies often include monetary damages, specific performance or cancellation and restitution. These are fancy phrases that mean the company in breach often will have to pay money to the harmed party, perform a specific act to make up for the breach or that the contract is cancelled and the party in breach will make some type of restitution to the harmed party. You can write the terms of breach into a contract in order to define next steps if and when a business contract should go sour.
Terms for each contractual agreement will vary with the scope of the project, industry engaged, and what risk each company takes when engaged in contractual obligation. Most of the damages lost to companies who suffer due to breach of contract are time and money. You cannot get time back which can truly cost more money than actual damages do. Entering into a contractual agreement has potential risks and rewards.
Source: FindLaw, “Breach of Contract and Lawsuits,” accessed on Dec. 4, 2017