What to Do When a Vendor Breaches a Business Contract

 Posted on January 31, 2024 in Business Law

Entering a business contract obligates you and the other party to fulfill specific terms and conditions. However, disputes can arise if one side fails to meet their contractual duties. If you believe your vendor breached your business agreement, several steps should be taken to protect your interests. A Texas business lawyer can help determine key actions to take when your vendor is in breach of contract.

Conduct a Contract Review

Carefully examine the original business contract signed with your vendor. Specifically note any sections detailing the vendor’s responsibilities, along with terms for breach of contract and dispute resolution. Verify that a breach has occurred by comparing their duties against their current failure to perform them. Document exactly which obligations were not fulfilled so you can present clear evidence of a breach.

Send a Breach of Contract Notice

Once you have confirmed the vendor’s contractual violations, send them formal written notice that they have breached your agreement. Outline the specific clauses and duties they failed to meet. Provide a reasonable timeframe for them to either correct the breach or respond to your notice. Be transparent about the negative impacts their breach has caused your business. Specify any monetary damages you may seek if the issue is not resolved correctly.

Attempt Good Faith Negotiations

Before pursuing legal action:

1. Make reasonable efforts to negotiate a settlement.
2. Be open to discussing why they could not fulfill the contract and determine if the issues can be remedied. You could agree to modified terms, extended deadlines, reduced payments, or other compromises.
3. Maintain thorough documentation of these good faith negotiations if you later need evidence of attempted resolution. If discussions reach an impasse, state firmly that you intend to enforce the original contractual terms.

Send a Demand Letter from Your Attorney

Have an attorney draft and mail the vendor a formal demand letter asserting your intent to pursue legal remedies given their uncorrected contract violations. The letter should list their obligations, detail how they failed to execute them, emphasize your reasonable faith efforts to reconcile, and urge them to settle the matter amicably. Be sure monetary damage amounts and other requested compensation are included. This shows you are serious about enforcing contractual compliance.

File a Lawsuit as a Last Resort

If previous resolution attempts fail, litigation may be required to claim breach of contract damages from your vendor. Your attorney can help gather additional evidence, establish jurisdiction, navigate court filings and hearings, estimate case timelines, and strengthen arguments to convince a judge or jury. Lawsuits can be expensive, time-consuming, and unpredictable, so view them as a final escalation step when vendors refuse to fix breaches or negotiate fairly. In reality, merely showing readiness to litigate often motivates settlements.

Contact a Bexar County, TX Business Contract Lawyer

Never allow vendors to get away without meeting their contractual duties without consequence, as this sets poor precedence for future deals. Mitigate financial harm from the breach quickly before more significant losses accrue. A Comal County, TX business contract attorney can help if the vendor is not trying to reconcile with you. Call Geoff Mayfield, Attorney at Law at 210-535-0870 to start with a free consultation.