Business contracts are legally binding documents that ideally stand to benefit both sides of an agreement. Partnerships, business deals and terms of employment are all reliant on a mutual willingness to uphold the contract at the heart of all professional relationships.
When one party breaches a contract, it is often to the detriment of the other party. While courtroom litigation is not a necessary course of action for all contract disputes, it is good practice to know ahead of time when the filing of a lawsuit might be an appropriate response to a breach of contract.
When should you file a lawsuit for a breach of contract?
While filing a lawsuit is always an option when another party breaches their contract with you, there are some factors to consider first. Primarily, you should consult with a legal advisor who can help you determine if you have a high chance of securing a favorable outcome in court. Keep in mind that a breach of contract is not always a criminal offense, but you may be able to secure compensatory damages.
Can you settle a breach of contract without a lawsuit?
Arbitration outside of court can be a more efficient and cost-effective alternative to litigation when harsh legal action is not necessary. Mediation is another option, and one that you should consider if both parties are willing to compromise on a solution and maintain an amicable relationship even after a breach of contract.
Litigation can be an appropriate response when a breach of contract involves a criminal act such as fraud or when you are adamant about receiving maximum damages. It is important to consult with your legal team to determine if the amount you can recover is worth the time and effort necessary for litigation, however.