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When does a breach of contract dispute occur?

Small business owners enter contracts all of the time, from the purchase agreements they have with their vendors to the rent agreements they have with their landlords. If you are a business owner, chances are that you have entered dozens of contracts while in business. And if you have been told anything about contracts, it’s probably that you must get everything in writing.

The reason it’s essential to get all contract details in writing is in case a dispute arises down the road. Breach of contract disputes occur when one party believes the other party did not uphold his or her end of the bargain. Because contracts are legally binding agreements, the court system can be used in effort to remedy the situation based on what was agreed upon.

Some examples of breach of contract include when one party doesn’t perform within the time allotted, does not perform within the terms provided in the contract or doesn’t perform at all. After a breach of contract has been alleged, one or both parties may try to enforce the contract, get out of the contract or recover financial losses that were sustained as a result of the alleged breach.

Typically, a breach of contract dispute starts informally with one party accusing the other party of breaking the contract. Sometimes, the parties are able to settle the dispute on their own, but if not and the stakes are high enough, lawyers get involved.

At that point, negotiations take place in effort to reach a settlement. Mediation is also sometimes used in effort to settle the dispute. When all else fails, a judge may be needed to rule on the breach of contract dispute.

When a business owner is involved in a breach of contract dispute -- whether as the accused or the accuser -- it’s important to be represented by experienced legal counsel who can help fight for the best possible outcome.

Source: FindLaw.com, “"Breach of Contract" and Lawsuits,” accessed Oct. 7, 2014

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