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6 Solutions for Breach of Contract in Business: Thoughts from Top Philadelphia Commercial Litigation Attorneys

Businessman tearing up contract

Solutions for Breach of Contract in Business

Businesses rely on contracts to ensure expectations are met and obligations fulfilled. But what happens when one party fails to uphold their end of an agreement? Breach of contract, though common, can have detrimental effects like delayed operations, financial losses, and damaged relationships. As a business owner in Philadelphia, knowing how to respond is critical.

We are here to help you navigate your breach of contract challenge. Contact our experienced team at Davis Bucco & Makara by calling 610-238-0880

Defining Breach of Contract

Before diving into solutions, let's review what constitutes a breach of contract in business. A breach occurs when one party fails to perform according to their contractual duties without legal excuse. This includes:

  • Failing to deliver goods/services as promised

  • Delivering defective or substandard goods/services

  • Failing to pay on time per the agreement

  • Violating a material term of the contract

  • Actively interfering with the other party's performance

Breach can be minor or material - the latter enables the non-breaching party to terminate the contract. But in either case, action should be taken to remedy the situation.

1. Send a Notice of Breach Letter

The first step attorneys recommend is sending a formal notice of breach letter. This letter should:

  • Identify the specific breach

  • Demand the party rectify it by a certain date

  • State consequences if they fail to remedy

Notifying the breaching party in writing begins a paper trail. It also allows them the chance to correct their actions before further steps are taken.

2. Seek Mediation Services

Litigation can be time-consuming and expensive - that's why commercial litigation attorneys often suggest alternative dispute resolution as a first option. Mediation involves:

  • An impartial mediator facilitating discussion

  • Parties explaining their perspective and priorities

  • Negotiating a mutually agreeable solution

Mediators help find common ground, aiming to resolve the issue through compromise rather than courts. Many breaches simply arise from misunderstandings, making mediation a viable fix.

3. Request Arbitration

When mediation fails, arbitration is another alternative to litigation. During arbitration:

  • Each party presents evidence to a neutral arbiter

  • The arbiter makes a binding decision to settle the dispute

Arbitration resembles a streamlined trial without lengthy proceedings or unpredictable jury verdicts. The private setting may also help preserve business relationships.

 4. File a Lawsuit for Breach of Contract

If out-of-court resolution proves impossible, filing a breach of contract lawsuit may be necessary. To succeed in court, the plaintiff must prove:

  • A valid contract existed

  • The defendant breached material terms

  • This breach caused identifiable damages

Commercial litigation lawyers handle these cases, marshaling evidence to demonstrate the breach and justify requested remedies.

5. Request Equitable Relief

Rather than monetary compensation, plaintiffs can pursue equitable relief by asking the court to order specific performance or injunctions.

  • Specific performance - the breaching party fulfills duties per the contract

  • Injunction - the breaching party is legally forced to act or prohibited from acting

Equitable remedies aim to repair the relationship so parties can proceed as intended. However, courts don't always grant them.

6. Recover Monetary Damages

When equitable relief is denied, plaintiffs can recover monetary damages for:

  • Loss of expected profits

  • Costs incurred from the breach

  • Payment owed under the contract

  • Attorney fees and court costs

Commercial litigation lawyers quantify these damages to recoup losses stemming from the breach. Securing damages is typically the main financial goal.

Key Considerations 

  • Send a breach of contract notice letter

  • Try mediation or arbitration first

  • File a lawsuit if unresolved

  • Seek equitable relief like specific performance

  • Recover monetary damages if available

Detailing the breach in writing, pursuing alternative resolution, and knowing litigation remedies will help companies respond effectively. Partnering with experienced Philadelphia commercial litigation attorneys also provides invaluable guidance.

With the right approach, businesses can overcome the challenges of breach to uphold their contractual rights. The solutions outlined above serve as a roadmap for navigating these complex situations.

5 FAQs About Breach of Contract

Still have questions about breach of contract? Here are answers to 5 FAQs from our Philadelphia commercial litigation lawyers.

1. What are signs a breach of contract has occurred?

Signs include failure to deliver goods or services per the contract, providing defective or inferior goods/services, not paying on time, infringing intellectual property rights, sharing confidential information, violating exclusivity terms, terminating without proper notice, and more.

2. What happens if breach of contract is ignored?

The breaching party may continue violating the agreement, causing escalating damages. Plus, ignoring breach relinquishes your contractual rights to seek recourse.

3. Can contracts require mediation for breach?

Yes, clauses like mediation provisions and arbitration agreements can mandate alternative dispute resolution processes to handle breach.

4. When does breach allow contract termination?

If the breach is severe enough to undermine the fundamental purpose of the contract, the non-breaching party may have grounds to terminate.

5. Are verbal agreements still legally binding contracts?

Verbal contracts are binding but harder to enforce. Written contracts provide stronger evidence if breach of contract litigation becomes necessary.

Selecting a Commercial Litigation Attorney to Support Your Breach of Contract Case 

At Davis Bucco & Makara, we harness 35+ years of unparalleled experience in construction law, offering robust and in-depth legal services. Call us today at 610-238-0880 for more i