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Ways to Recognize and Respond to a Material Contract Breach

Whenever possible, always try to work closely with clients and vendors to see if minor contract irregularities can be easily fixed or resolved. However, if it appears that your interests have been seriously damaged by the other party’s breach, you must be prepared to take action so you can minimize any damages. Otherwise, you may have to go to court to resolve your differences.                                                                                                                                          

Depending on the type of business you do, it can sometimes take both time and experience to recognize a significant breach of a business contract. The following information should help you better evaluate future circumstances so you won’t lose time when you need to be protecting your interests.

Tips for Spotting Acts/Omissions that May Cause a Significant or “Material” Breach of Contract

  • A core or central part of what you had bargained for is not being transferred to you. Let’s say you had negotiated a contract to use a company’s full-service copying and printing equipment during its “off-hours.” Once you’ve signed the contract, you learn that many of the pieces of equipment are broken and the other party has no intention of repairing them any time soon. If this fully renders the contract useless to you, immediately notify the other party that you need to cancel the contract due to his/her material breach to minimize your losses and enter a different contractual arrangement;

  • Carefully review how many of the contract terms have actually been fully honored. Next, determine if it’s in your best interests to go ahead and accept what’s already been done – yet be prepared to negotiate a reduction in price to make up for any losses you may occur

    as a result of the limited breach that has occurred;

  • Ask yourself if any “bad faith” was involved in the other party’s actions. If there was any and it has negatively affected your contract rights, you may need to seek immediate help from your Peachtree City business attorney to minimize your losses and decide whether you need to file a lawsuit;

  • Always consider having your attorney review your business contract before any problems occur – or even before you sign it. (Better still, you may want to ask him to draft it for you to minimize all future problems);

  • Given your concerns about incurring damages due to the other party’s alleged breach, be sure you’ve properly fulfilled at least some of your obligations, when appropriate. If you  prefer to do nothing, always obtain legal advice as to whether or not you must do anything (and keep very careful records regarding all contracts you sign);

  • If you have personally breached a contract in some manner, be sure to ask the other party how you might reasonably make up any of the other company’s losses. Of course, you should be in close contact with your attorney at this point and you should avoid stating in any written communications that you’ve breached the contract;

If the contract involved the delivery of goods and you’re certain you’ve safely delivered them (even though you’ve still not been paid), can you now negotiate so that the other side pays you within a reasonable period of time, so you can both avoid litigation?

Whatever you choose to do, immediately review the precise terms of your contract and see if there’s any simple way of fairly concluding matters. Few people want to waste the time and money involved with litigation. It will often be to your long-term advantage if you’ll take the “high road” – assuming there’s been no “bad faith” involved on either side.

To obtain help with handling all of your Georgia business planning needs, please contact the Law Offices of Shane Smith today.  You can schedule your free initial consultation with a knowledgeable Peachtree City estate planning attorney by calling: (770) 487-8999.


Shane Smith
Advocate for the Seriously Injured in Georgia