3 Ways to Protect Your Startup From Breach of Contract Lawsuits

No business is immune from contractual lawsuits. Understanding all litigation risks and remedies can prepare your business for potential legal disputes arising from contract breaches. While the parties in a contract often have good intentions, unforeseen factors may make it impossible to fulfill the contract terms. Dispute resolution can be difficult and financially draining, especially when the contract involves large amounts of money. However, the following tips can help you avoid unnecessary conflicts and lawsuits. Read on for more information.

1) Write Down Your Agreements, Updates, and Keep Accurate Records

Both parties must agree to the terms governing their contract agreement since it’s the basic principle behind drafting a contract. Ensuring all agreeable terms and conditions are clearly recorded is vital.

Recording your contractual obligations ensures your business is well-positioned to negotiate or respond to disputes and lawsuits. However, you should be careful not to sign any concessions or admissions when discussing issues touching on breach of contract with the other party. Typically, the documents may be used as evidence against your business if the parties seek formal dispute resolution.

In addition, it is important to agree on all the legally binding terms in your contract. If you make temporary changes to your original contract, ensure to update the document to reflect the new agreement and terms.

Most attorneys advise you to prioritize out-of-court negotiations whenever a dispute arises. However, it may not be possible if the other party is unwilling to participate. You can include a clause in the contract to facilitate out-of-court dispute resolution. The communication and discussions must be expressed without prejudice. This means the other party can’t use the communication to weaken your case should the dispute proceed to the court system.

2) Ensure the Contract Doesn’t Break Any Laws and Follow the Terms

Any obligations in a contract must abide by the law and should not include any illegal activity. When a contract is breached, and the parties seek legal redress, the court cannot enforce an illegal contract. It is best to avoid engaging in contracts of this nature, even when you know it is not enforceable by law.

It is common for businesses to commit to specific contract terms even when they are not confident about their ability to fulfill their duties. While personal and external reasons can prevent you from fulfilling your contractual responsibilities, it is important to consider your ability to fulfill the contract to the letter.

When another party breaches your contract, ensure there is no solid reason for the party to accuse you of any wrongdoing. Upholding your side of the deal can strengthen your case and protect your business from unnecessary liability.

3) Engage an Experienced Lawyer

Laws in different jurisdictions are always changing, making it almost impossible for business owners to keep tabs on various legal aspects of a business. It’s essential to have a competent lawyer to ensure your contracts are favourable and advise you when disputes arise.

Businesses enter into many contracts with vendors, suppliers, and other stakeholders. Since most legal documents contain numerous details, a good business lawyer can protect your company from potential breach of contract and subsequent financial loss. When legal issues arise in your business, consulting an experienced lawyer from Cohen Schneider Law P.C. can prevent your business from overwhelming lawsuits.

Endnote

Contracts and agreements are common in most business transactions, but you might face a contractual lawsuit if you fail to honour your obligations. Unless you have a good grasp of the law, consulting a competent attorney can help you avoid unnecessary conflicts.