Businesses often rely on outside parties for elements key to the organization’s success. They may hire a contractor to provide payroll services or contract with a vendor to provide materials for manufacturing. It can take many days of negotiation to arrive at a deal, as companies will usually need to ensure the performance of exacting specifications for the price of goods and services, as well as the turn-around time related to fulfillment of a third party’s obligations.
When a business hires a contractor, purchases from a vendor or accepts a bid from a services provider, the organization will depend on the other party to fulfill their side of the agreement. Unfortunately, businesses often have to respond to significant breaches of contract that might include contract nonperformance. A vendor that fails to deliver goods or an outside professional who does not render services as promised could constitute nonperformance scenarios. Such material breaches of contracts can leave a business in a real lurch. How can organizations respond to nonperformance?
Send notification
A vendor or contractor cannot correct an issue if there has been some breakdown in documentation or communication. Sometimes, what seems like a major breach of contract is simply the result of an oversight. Cooperating with the lawyer to send formal notice about the nonperformance issue can sometimes be enough to resolve the matter and push the other party into compliance.
Ask the courts for support
Nonperformance is a material breach of contract in most cases and could lead to numerous different rulings by a civil judge. In some cases, the judge could orders specific performance, thereby compelling a vendor to deliver goods or a contractor to finish a project.
Other times, judges might invalidate the arrangement between the parties for future purposes and award damages to the plaintiff in addition to a refund for any funds already paid. The kind of resolution a business seeks after a nonperformance issue will reflect whether or not the two parties can continue to do business in the future. Significant contract breaches often lead to an end of business relationships.
Taking appropriate actions after a major breach of contract and putting the right protections in place when negotiating contracts can help businesses that are seeking the support of vendors and service providers.