In our litigation blog series, “Business Disputes: Mitigate, Mediate, and Safeguard,” Corporate and Securities litigation attorney Dharmi Mehta, covers different types of business disputes from breach of contracts to client complaints.
All businesses run a risk of dispute at some point, from partner and shareholder disagreements to complaints and litigious action from external sources. No matter what the source or reason, disputes remain a source of stress, a drain on resources and a distraction if not a derailment from business goals.
In this blog post titled, “What to do if you have been Sued for Breach of Contract,” Litigation attorney, Ms. Mehta offers key steps to take that can help resolve a dispute amicably or at least limit the damage to the business. If you are facing legal action, consulting an experienced breach of contract lawyers can be a critical first step in protecting your interests and navigating the complexities of litigation.
Of course, mitigating the risk of contract disputes is 20/20 hindsight and a futile practice in self-admonishment. For future contract agreements, it is advisable to approach with the following in mind:
Factors that can mitigate contract disputes
The risk of contract disputes can be mitigated by following the below best practices below when putting a contract together.
- A contract should avoid bias
- Set the terms for negotiation
- Include a termination clause
- Clearly define roles and responsibilities for all parties involved.
- Specify dispute resolution mechanisms, such as mediation or arbitration.
- Ensure the contract complies with relevant laws and regulations.
- Use precise and unambiguous language to avoid misinterpretation.
- Include provisions for amendments and updates to the contract.
- Document performance expectations, deadlines, and deliverables.
- Require all parties to thoroughly review and agree to the terms before signing.
Many times, a badly written contract is the cause of a dispute. When that arises, a business owner who has been sued should strive to resolve matters through mediation and avoid litigation.
Available Remedies for Breach of Contract Claims
When a party has materially breached a contract, the other party has the right to seek remedies for breach of contract such as:
Damages: This is the most common remedy. The non-breaching party can request one or more of the following, depending on the severity of the breach.
- Compensatory Damages which can be sought for direct losses due to the breach,
- Consequential Damages are financial remedies for indirect losses,
- Punitive Damages to punish the offending party, and
- Nominal Damages which are sought when a breach is proven but there was no financial loss.
Rescission: This is when the contract is rescinded, freeing and frees both parties of their contractual obligations.
Performance: This requires the breaching party to satisfy their obligation to the contract as agreed upon.
Injunction: This is a mandatory order of the court requiring the breaching party to take specific action or cease specific action in relation to the contract.
Steps to Take When Sued for Breach of Contract
- Thoroughly review the contract to understand the terms and retain experienced legal counsel who can comprehend the nuances of the contract.
- Strive to engage in open and transparent communication with the plaintiff.
- Explore other contract dispute resolution avenues such as mediation.
- Maintain detailed records of all actions taken.
How to Prepare if You have Been Sued for Breach of Contract
The goal is to avoid expensive and stressful litigation proceedings and reach an amicable agreement. However, if all other avenues have been exhausted, it is vital to work with an experienced corporate attorney to represent your best interests.
Mediation: This collaborative process involves a neutral third party who helps the disputing parties work together to reach a mutually agreeable resolution.
Arbitration: Disputing parties may choose to present their case to an arbitrator, who reviews the evidence and delivers a decision based on the contract terms, which can be either binding or non-binding.
Litigation: If mediation or arbitration are not viable options, the dispute may proceed to a court trial where a judge or jury examines the evidence and issues a binding decision.
Mitigating business risks such as contract disputes remains the primary defense against lawsuits, however, working with a knowledgeable litigation attorney can limit the impact of the lawsuit and mitigate the risk of future similar disputes.
For more information or if you have been sued for breach of contract, contact Jacko Law Group at 619.298.2880 or email [email protected].
