Businesses frequently negotiate contracts to help prevent conflict. The process of establishing clear expectations limits the likelihood of disputes arising later. Contracts with employees, landlords, service providers and suppliers can all be important for successful business operations.
Ideally, every party who signs a contract should uphold their obligations to the best of their abilities. Sadly, that is not always what happens. Confusion about the terms included in the contract, changes in a working relationship or even frustration with shifting market conditions might lead to one party breaching a contract or defaulting on their obligations. In such scenarios, civil litigation can provide solutions to the business harmed by contract breaches.
How can a civil lawsuit help resolve a contract dispute?
By offering various remedies
Civil lawsuits allow those affected by a breach of contract situation to hold the other party accountable. So long as the courts agree that the contract was valid and enforceable, the plaintiff alleging a breach can ask for various remedies allowed under the law.
Plaintiffs can request rescission, which is essentially the cancellation of a contract. They can ask for damages when a breach of contract has generated clear financial consequences. The other party may need to provide financial compensation for the harm caused by the contract breach.
The plaintiff could even request an injunction to prevent inappropriate conduct or orders of specific performance to directly resolve the contract violation that occurred. Every breach of contract scenario is different, and plaintiffs often need to request specific remedies from the courts to resolve the issue.
By creating an incentive to cooperate
Many breach of contract lawsuits never make it to trial. The defendant may respond assertively after receiving service with lawsuit documents. In many cases, a pending lawsuit might inspire someone in breach of contract to correct the issue on their own. They might complete unfinished work on a project or deliver supplies they previously refused to provide.
Other times, the defendant facing the lawsuit might agree to mediation or negotiations as a means of resolving the conflict without going to court. The realization that a judge is likely to rule in favor of the plaintiff can inspire those who failed to uphold a contract to take responsibility for their failings.
Reviewing a contract itself with a skilled legal team is often a good starting point for those who wonder whether a breach of contract lawsuit might be an appropriate response to a contract dispute. Companies that initiate contract litigation can work to limit the losses a breach of contract generates and may also be able to deter others from overtly reaching agreements with that company in the future.