A breach of contract lawsuit can hurt your business in more ways than one. Such a lawsuit can cost you money, waste your time, and even ruin your reputation. Take the measures below to help you avoid a breach of contract lawsuit.
Have Strict Policies and Procedures
If you are not the only one who can sign contracts on behalf for your business, then you should set clear policies in place to guide all your business contracts. Enforce the policies and procedures strictly so that no one deviates from them.
For example, you can have a policy that requires at least three parties to scrutinize every business contract. Ensure no employee or associate flouts the policy before they sign a contract.
Insist on Written Contracts
Oral contracts are bad because you can easily misunderstand oral statements. Not only that, but a deceitful person can easily renege on or change the terms of a contract if he or she knows you don't have documentary evidence for the contract. Always insist on written contracts to avoid such problems. Don't shake on any agreement, even if you know the other party well.
Respond to Complaints Promptly
In some cases, your clients or suppliers may sue you for breach of contract because of the way you handle the breach in the first place. When anyone comes to you with a contract complaint, take the complaint seriously, investigate, and find a solution for the client. Don't rest until the aggrieved party is satisfied.
Also, take the opportunity to diagnose the cause of the problem and put measures in place to avoid a similar problem in the future. For example, if you did not finish a project on time, find out the reasons for the delay to help you avoid a similar situation in the future.
Avoid Ambiguity
The quality of a contract is dependent on its clarity. Each party involved with the contract should understand their obligations to the letter. If you allow an ambiguous contract, you may part ways with very different understandings. The other party may then sue you for breach of contract even though you did not believe you were breaching the contract.
For example, if a contract requires you to deliver some equipment, specify the make, model, and number of all the items the contract mentions. Employ that level of clarity in every contract to which you are a party.
Include a Dispute Resolution Clause
When you draft a contract, include a dispute resolution clause that prioritizes other measures over legal redress. For example, you can include a clause that gives priority to alternative methods of dispute resolution (such as mediation or arbitration). Another example is to include a grace period to remedy the breach before any party can file a lawsuit.
Have a Lawyer Review Your Contracts
Lastly, you should also have a commercial attorney review any contract you are about to sign. The review process should extend to even seemingly small contracts; don't reserve it for large contracts only. After all, people sue for all manner of things these days as long as they have the legal right to do so.
For example, you should not assume that a client cannot sue you for a thousand dollars even if the amount is insignificant to their business's bottom line. Such a client may even sue you as a matter of principle if you breach their contract.
Hopefully, the above tips will help your business avoid a breach of contract lawsuit. However, if someone ever sues you for a contract breach, know that the law offices of Wolfe, Jones, Wolfe, Hancock, Daniel & South, L.L.C., are at your service to help you with your breach of contract lawsuit. Contact us as soon as possible so that we can help you mitigate the damages.