Steps to Take After a Breach of Contract Occurs

May 24, 2022

If, for example, a business hires another business to deliver raw materials, the two parties will enter into a contract. Often, this is a written contract. Even though it is possible to enforce oral contracts in California, it is advisable that you stick to written contracts. Should the other business fail to deliver as agreed upon in the contract, a breach of contract is said to have occurred. If a breach of contract occurs, the following are five steps to take;

Have an Open and Honest Talk With the Other Party

Sometimes a party might not even know they breached a contract. Other times, breaches occur because of honest mistakes. For example, if a party misunderstands the requirements in the contract, they may end up breaching it. As long as both parties to the contract are dedicated to seeing that they both benefit, an open and honest discussion about how to handle the situation can be profitable.

Understand Your Damages

If you decide to pursue damages, it is vital that you know your damages. You need to know the specific damages the other party owes you. Often, a breach of contract will lead to the loss of money. If this is your case, you can seek to recover damages for unnecessary costs that you had to incur because of the breach or profits you lost.

Consider Alternative Dispute Resolution Methods

Often, people assume that litigation is the answer when a breach of contract occurs. This is far from the truth. It is possible to resolve matters outside court. For example, after knowing what damages you are owed, you can attempt to reach a settlement through mediation or arbitration. Mediation involves trying to resolve a matter with the help of a mediator. On the other hand, arbitration, which is more formal than mediation, involves trying to resolve an issue with the help of an arbitrator or panel of arbitrators. Unlike a mediator, who is neutral and does not make a final decision, an arbitrator makes a ruling on what should happen.

Determine Whether Going to Court is Necessary

After trying an alternative dispute resolution method and it fails, you will need to decide whether you want to proceed to court. To determine if you should move to court, you will need to, among other things, assess the evidence you have, assess whether you are within the statute of limitations, and compare the cost of litigation to how much damages you are owed.

According to California law, you have four years to file a breach of contract lawsuit as it pertains to written contracts. On the other hand, you have two years to file a breach of contract lawsuit as it pertains to oral contracts. If, for example, yours is a case of a written contract and four years have passed since the breach occurred, and you decide to file your lawsuit, the judge will not hear your case unless an exception applies.

Prepare for a Lawsuit

Lastly, if you decide to file a lawsuit, you will need to prepare yourself with the help of an attorney.

Contact a San Jose Business Contracts Attorney

At SAC Attorneys LLP, our qualified and dedicated attorneys are ready to help you with your breach of contract case. Contact us today to set up a consultation.