Contract breaches are a serious concern for modern businesses, which is one reason so many organizations insist on putting all major agreements in writing. Yet, businesses that are coping with the consequences of one party’s contractual default may simply try to absorb the losses with dignity and move on to a better arrangement for a variety of reasons.
However, contract breaches often put businesses in vulnerable positions and may cost them substantial amounts of money if they don’t hold a breaching party accountable for their inaction. Instead of ignoring a service provider who didn’t finish a project or a vendor who stopped making deliveries, a business may instead need to take the party that breached the contract to court to demand justice. These are some of the most common reasons that companies ask the courts for help in a contract breach situation.
1. They want to force a settlement
The vast majority of business disputes, including breach of contract claims, eventually settle outside of court. When the other party is non-responsive or combative to attempts at direct communication, sometimes a lawsuit is the only way of conveying how earnestly one business intends to pursue the matter.
Filing a lawsuit can very easily motivate a party that has violated the terms of the contract to correct their non-performance or make arrangements to do so. After one party files a lawsuit over a contract matter, the situation will lead to a pre-hearing settlement in the vast majority of cases.
2. They need a judge to compensate them
When non-performance or other contract issues clearly cost a company money, the organization will want to pursue a claim to demand damages. A judge can order the party that violated the contract to compensate the other for the financial consequences of their failings. They could also order specific performance, thereby forcing one party to fulfill their promise to the other.
Instead of shying away from litigation due to the mistaken belief that a filing will irrevocably damage business relationships, an organization may need to embrace the civil litigation process as a means of holding other parties accountable for their failings. Pursuing a breach of contract lawsuit can both preserve a company’s reputation and protect it from financial loss under the right circumstances.