Business leaders who sign agreements with other parties typically expect everyone to fulfill their obligations. Contracts help serve as proof of an agreement. The written document produced when negotiating a contract helps clarify each party’s expectations and makes the agreements enforceable should issues arise.
Most contracts help create healthy and stable working relationships. Parties who understand their obligations can be proactive about fulfilling their promises to others. Unfortunately, contract breaches do occur with some regularity. A business leader frustrated by contract issues may decide to initiate a breach of contract lawsuit to resolve the dispute with a vendor, landlord or former employee. How often do breach of contract disagreements go to trial?
Many business lawsuits settle
When there are disagreements about contractual obligations that lead to litigation, the parties involved in the disagreement may be able to settle the matter amicably. In some cases, service with documents for a pending lawsuit may inspire the party in breach of the contract to communicate about the issue and take steps to resolve it.
They might explain why there have been delays in contract fulfillment or even propose alternative dispute resolution as a means of discussing and settling the issue. Avoiding litigation can be a strong motivator. A pending lawsuit can be expensive for both parties involved in a disagreement.
Should the lawsuit go to trial, it could potentially damage the reputation of the party in breach of the agreement. Information about the matter becomes public record, meaning that other businesses or professionals might discover the issue before agreeing to do business with a service provider or supplier who breached an agreement.
A large number of pending contract disputes end up settled before a trial becomes necessary. However, if the matter does go before a judge, the courts can offer several forms of relief for the plaintiff. Taking a contract dispute to trial can lead to contract enforcement or rescission. The plaintiff may be able to enforce penalty clauses or request damages for the harm caused by the contract breach.
Taking immediate action to address contract breaches through communication, formal notices and legal filings can help those running businesses control their costs and hold other parties accountable for failing to follow through on their promises. A breach of contract lawsuit may lead to an amicable resolution or the courts intervening on behalf of the plaintiff.