A company’s contracts influence everything from what it must pay its workers to what costs clients must pay for their services. Organizations often invest both time and money in the development of strong contracts that adequately protect the business.
Unfortunately, the other parties that sign those contracts may not properly uphold their obligations. Contract violations could involve a worker starting a competing business after quitting their job or a customer refusing to pay the remaining balance for services already provided by the business.
Is it necessary for an organization to take a breach of contract matter to civil court when another party does not follow the terms of a written agreement?
Litigation isn’t necessary but can help at times
It is natural for those who own or help operate a business to worry that a lawsuit could cause reputation damage or unnecessary expenses for the company. Both the risk of negative publicity and the expense involved in going to trial could serve as strong deterrents against relying on the civil courts to enforce a contract after a material breach.
Executives and business owners may worry that it may seem unnecessarily aggressive to take a former worker, a supplier or a non-paying customer to court. They would rather resolve things amicably. Occasionally, sending a written notice about a contract breach can resolve a dispute. A former employee unfairly competing with a business or a client who has refused to pay may change their conduct when they receive a warning letter.
Many times, however, those who have flagrantly violated a contract will not stop doing so just because they received a warning notice. A business may need to follow an advisory letter with a legal filing. Initiating a lawsuit can put pressure on the other party to take the matter seriously. It is very likely that the matter would not end up going to trial.
Approximately 95% of all lawsuits filed in the United States, including a substantial majority of business lawsuits, end up settling or getting dismissed before going to trial. Filing a lawsuit is often a way to push negotiations forward. The other party may agree to compromise or have a sit-down meeting when they have previously refused if they recognize that they might soon have to answer for their actions or omissions in open court.
Even if the matter does go to trial, judges can award plaintiffs damages that can make the expense involved worthwhile. Additionally, most businesses, clients and prospective future employees recognize that enforcing contracts is sometimes necessary for the protection of a business.
Overcoming the very common aversion to litigation that many people feel may lead to a better resolution for a business contract dispute, depending on a company’s unique circumstances and goals for any given situation at hand.