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Has one of your vendors breached their contract with your company? Is one of your current vendors accusing you of being in breach of contract? The first thing you should do is contact a business attorney with experience in contract disputes and business litigation.

What Is a Breach of Contract?

Breach of contract is a very broad legal term that essentially means one of the entities in the contract isn’t following the rules everyone agreed to by entering into the contract. This can cover a wide range of potential actions or inactions, including:

• Someone either failed to or refuses to do something promised in the contract
• One of the parties did something expressly prohibited by the contract
• A party did something that in some way prevents one of the other parties from fulfilling their contractual obligations

An example of breach of contract would be failing to pay a vendor for products or services rendered. If your business has a Net 30 agreement in your vendor contract and you don’t pay in full within 30 days after receiving the vendor’s shipment, you’d be in breach of contract.

Or maybe your business has a contract with a maintenance company for your equipment or vehicles. The contract stipulates they come to your lot on the 15^th of every month. One month the vendor calls you and says they just lost two of their best people and they’re behind on work, so they won’t be able to make it till the 20^th. That would technically a breach of contract. However, calling an attorney on the 16^th might not be your best recourse in that scenario.

Is My Breach of Contract Material, Immaterial, Anticipatory or Actual?

There are many types of breach of contract, some of which are more serious than others. Minor breaches, also known as immaterial breaches, are the least serious.

Actual breaches and anticipatory breaches are related in that an anticipatory breach is just an actual breach that has yet to occur. If a vendor informs you they won’t be sending the product you paid for, they’re in anticipatory breach. They could still technically send the product by the agreed upon date, but they’ve warned you they won’t or you have evidence to suggest they won’t or can’t fulfill the contract.

It becomes an actual breach once the date to fulfill the contract has come and gone. Damages may include consequential losses, which are losses beyond the value of the contract. For example, if your vendor failed to send $5,000 worth of ingredients to your restaurant and you lost out on $10,000 of revenue as a result, the damages might include the cost of the contract plus the additional $5,000 of consequential losses.

Material breaches are often ones where the contract was only fulfilled in part, or the benefit was less than promised. If you ordered 1,000 widgets from a vendor but it turns out 500 of them were defective that would be a material breach. They technically delivered 1,000 widgets on time, but the results were not what was agreed to in the contract.

What You Should Do

Breach of contract is complicated. In many cases vendors or clients might technically breach a contract but for understandable reasons. When that occurs it’s not uncommon for the breach to be a temporary inconvenience.

Consider the example of the fleet maintenance vendor losing two employees and needing to reschedule service – if you like the vendor and it’s a one-time thing you likely won’t want to take them to court. It also wouldn’t make sense given that the process would take longer to litigate than the delay.

Negotiating a solution is frequently the less expensive and inconvenient way to deal with small problems with vendors you like or need. If a vendor who used to be reliable has suddenly been missing deadlines or is otherwise regularly being in breach of contract in small but annoying ways, you may want to talk to a business attorney about your options.

In some scenarios you may want to use litigation as a way to enforce contract compliance rather than as a means to end a contract or collect damages. A good example are former employees who violate their non-compete clause. You technically can’t fire them since they no longer work for you, but you might want or need them to comply with the non-compete they signed. Litigation, or the threat of litigation, may be your best option.

A business litigation attorney can:

1. Draft a demand letter and send it to the employee
2. If the former employee doesn’t desist your business lawyer would draft a complaint detailing the resolution you’re seeking – in this case, you’d be asking for contract compliance rather than damages (although you may be asking for both)
3. Your lawyer would then draft a summons to send to your former worker
4. If the worker persists you and your attorney would need to go through the discovery and crossclaims process
5. Go to court with your evidence
6. Your business attorney will explain to the court in detail the contract and how your former employee is in breach of it
7. The court would decide on penalties

Business Liability Attorneys in Atlanta

Are you in need of an attorney for business litigation or do you need to defend your business from a liability lawsuit? Edwards & Hawkins represents Atlanta businesses and insurance companies facing all types of liability claims, from malpractice defense and insurance bad faith to slip and falls and product liability.

Contact us at 404-526-8866 to learn more about our services.