Your Business Contact is in Breach: Now What?

Your client hasn’t paid your company for services rendered, and your collection efforts are slipping past the first 90 days without successful recovery. You think it’s time to declare the contract you’d created for the sale in breach, but how do you go about doing that exactly? Because a contract is a legal document, there’s a very specific set of benchmarks that a letter declaring a breach of contract must meet. What are those essential provisions? Our business litigation lawyers break down the essentials.

Provide Accurate Dates and Notice

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As simple as it sounds, some business owners neglect to date their demand letter informing the client/vendor of the contract breach. They also forget to refer to contract for a notice clause containing the breaching party’s contact information, which can lead to delays in sending out the declaration to the right person. If the dispute ends up in court, and it probably will, the date the other party is informed of the breach officially can be very important in recovering damages.

How did the Breach Occur?

Demand letters must describe the contract breach, including the requirements of the breaching party to the agreement and how their actions did not fulfill said requirements. List the clauses of the contract affected by the other party’s breach, and how the breaching party’s actions (or inactions) have rendered them in possible to fulfill. The court generally pays more attention to material breaches – actions that destroy the value of a contract – than agreements that are still salvageable. You can still give notice if the breach is non-material, but the contract won’t dissolve. In other words, the both of you may have to sit down and work it out through mediation.

Don’t make Communications Personal

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Keep your word choices and tone formal, and avoid language that could be construed as threatening or angry. Remember, any letter you said could end up as evidence in a lawsuit. The court won’t look kindly on your behavior in attempting to cure the agreement through threatening the other parties to the agreement. Be businesslike. Be kind. Do not ever use aggressive language.

Offer a Means to Cure the Agreement

Curing the agreement refers to a solution that preserves the contract without needing to involve the courts. Informal talks can yield the best results for restoring confidence that all parties can satisfy their ends of the bargain. Just remember to stay calm and negotiate in good faith, that is, with the intention to find a solution and satisfy the contract. If you can’t find a workable solution, you can always pursue a more aggressive legal avenue with our business litigation attorneys at the helm of your claim.

If you’re in the midst of a contentious contract battle, you need effective legal assistance to do what’s best for your business. Our law firm can provide effective, highly targeted collections work to remedy you agreement in the best interests of your company. Contact us today for a consultation with one of our experienced commercial attorneys.