Issues with a contract are frequent in business. They can occur in even the best of relationships.
Whether a contract breach by another party is major or minor, it is wise to bear the following three things in mind. These can help you determine how best to respond.
1. Does the contract say what you believe it says?
Taking out the contract and reading it is one of the first things you should do when a breach occurs. This is especially true if the contract is an old one or if you were not directly involved in making it. Only once you are absolutely clear on the terms of the contract can you make an informed decision on how to respond.
2. Is the relationship one you want to keep?
Some contract breaches come at the perfect moment. They give a party that has been wanting to leave the arrangement the perfect excuse to do so. On other occasions, you might really want to keep doing business with the other party, and it might even be worth putting aside the breach they are guilty of if it allows you to maintain that relationship.
3. What could be the wider consequences of any response?
Every action has a reaction. Be sure to think carefully about what consequences might result from any action you take to deal with the dispute. If you respond too aggressively, it could dissuade others from doing business with you or cause the other party to dig in, rather than offer an easy settlement. You might even lose customers who have nothing to do with the contract issue if word spreads that you are not a pleasant company to deal with, especially if you operate locally.
If you are too soft on the matter, it could lead to others who have contracts with you trying to take advantage of what they might see as a weakness. It could also mean you fail to recover any money you lost due to the breach.
Seeking legal guidance is always wise when dealing with contract disputes. This can help you determine how best to handle the matter.