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Breach of contract can lead to business litigation

When business owners seal a deal, they usually sign a contract. A written contract outlines the responsibilities of both parties; failure to follow what is written can result in business litigation. Before a business owner signs a contract, he or she should thoroughly read its content to better understand the stipulations of the agreement. Both parties may also request revision of the contract before signing because doing can avoid costly litigation later.

Breach of contract is one of the most common problems when it comes to business contracts. A contract is “breached” if one or both parties refuse to perform his or her obligations based on the agreement. If both parties negotiate the steps to enforcing the agreement, litigation will be unnecessary. If one or both parties are unwilling to negotiate, the case will end in litigation.

Business litigation can be costly and harm the company’s reputation. Business owners often try to resolve issues out of court to protect the company’s image and avoid a costly court case. However, litigation could be the best solution if a contract is breached. For example, if a breach causes excessive loss to the company, a court solution may be the only available remedy. Before taking the case to court, the owner should prepare all necessary documents and hand them over to a legal representative who will address all legal aspects of the case from documentation to the computation of financial losses.

Each business litigation case is unique and can take place in a state or federal court, depending on the case. It is important for business owners who are in the middle of similar cases to review all their options before heading in court. They may also consider which legal option yields a higher settlement. If the other party offers a settlement that is enough to cover all losses, the plaintiff may consider accepting the settlement.

Source: FindLaw.com, “Contracts Basics,” Accessed on Sept. 18, 2014

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