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A Guide On Breach Of Contract

A breach of contract happens when a party does not fulfil their responsibilities in a contract. It occurs due to their negligence or unavoidable occurrences such as accidents that limit the party's ability to honour the agreement. Read the excerpt below to learn more about the breach of contract and how you can avoid such situations.

How To Avoid Breach of Contract

Avoid contract breaching by ensuring the contract meets the minimum legal requirements. A legal contract contains an offer, consideration and acceptance. Further, it cannot be used to sell illegal goods and services. The contract should not have contradicting or confusing clauses. Ask a lawyer specialising in commercial law to evaluate the agreement to ensure it meets these requirements.

Parties must be honest with each other once they enter into a contract. For instance, you cannot claim to provide a product that you cannot acquire. On the other hand, customers may be required to provide proof of finances to ensure they do not default on payments. Your lawyer should help you conduct some due diligence to ascertain the ability of the other party to honour the agreement. 

The contract's clauses should compel parties to honour the agreement. For instance, they should be penalised if they are unable to execute their obligations. The contract should have a reasonable conflict resolution mechanism. Typically, out of court processes (arbitration, negotiation and mediation) are ideal methods to settle such disputes. Parties should also include an amendment clause that enables them to adjust the terms of the contract to suit changing circumstances.

What To Do Incase Of Contract Breach 

You should contact your lawyer once the other person breaches the contract. At this stage, the lawyer will activate the contract's dispute resolution mechanism. He or she will contact the other party and inquire why they decided to breach the agreement. It is possible to resolve the dispute at this stage. Could be the other party has run into business problems and requires a few days to deliver services or make payments. You could also opt to amend or cancel the contract. 

There are cases where you could run into legal or financial problems if the other party breaches the contract. For example, take a situation where you have to renew a lease because someone selling you a house decided to sell it to another buyer. In such a case, you could claim compensatory, restitution or liquidated damages.  

Avoid contract breaches by ensuring the agreement contains contingencies to compel both parties to honour the contract. As a rule, you should ask your commercial law attorney to examine the terms of any contract to ensure they protect your interests.