When you have made a contract with a person or another business, you expect that both parties will uphold their part of that agreement. However, when that other person or company fails to do what they promised, knowing your options can be vital in protecting your business.
Is the breach of contract material or immaterial?
One of the most important things to consider after a breach of contract is whether that breach is material. A material breach of contract creates a hardship for you and your business. They may impact your profits, making it difficult to carry out your daily work or limit your ability to fulfill your contractual obligations. In these cases, you can file a lawsuit against the other party to offset the harm that the breach has done.
On the other hand, an immaterial breach of contract involves a violation that does not have a significant impact on your business. For example, a delivery company may be late in bringing supplies to your business, but a one-day delay will not usually prevent you from maintaining the operations of your business.
Can you pursue legal action?
When a breach of contract does material harm to your business, you can seek damages from the other party or ask the court to order them to carry out the terms of the contract. The California Supreme Court has noted in past decisions that these damages should “approximate the agreed upon performance” and put your business in relatively the same position that it would have had if the contract was followed as written.
If the court finds in your favor in your lawsuit, you could receive damages to offset the impact that the breach has had on your business. This can include money spent on equipment for a project you were unable to carry out, the effect that the breach has had on your profits and other costs.
You can also seek specific performance, in which the court orders the other party to carry out their contractual obligations. The court usually grants a specific performance when monetary compensation will not adequately offset the harm done by the breach.
An experienced business law attorney can tell you more about your legal options and help you explore which course of action is right for your business. When a breach of contract threatens your daily operations and your profitability, you can protect your business.