As a small business owner, it’s wise to use contracts when partnering with other businesses or individuals. Putting the terms of an agreement in writing increases the chances that things will go smoothly and ensures that both parties are on the same page.
However, a contract breach can sometimes occur, which could cause significant harm to your business. This might happen if you’ve paid for services that were never rendered, meaning the company you hired didn’t adhere to the contract. An example of this could be a general contractor who hires subcontractors to do plumbing or electrical work, but they never show up on the job, delaying the entire project.
What if it’s a minor breach?
Contract breaches are often categorized as either major or minor, depending on what happened and the impact it is expected to have on the business. For instance, missing a deadline is technically a breach of the contract, but may be considered minor compared to failing to provide products or services at all.
Even with minor breaches, though, there can be significant financial harm to your business. If your parts supplier misses a shipment by even a day or two, production at your own facility may grind to a halt. This creates a backlog you weren’t expecting, wastes hours of productivity from your workforce, and could cause you to miss important deadlines yourself—such as shipping products to end consumers or retail centers.
What should you do after a breach?
Not only is it crucial for business owners to know how to draft clear and enforceable contracts, but they also need to understand the steps they can take to remedy the situation if a contract is breached. An experienced firm can help you explore your options.