Practical Tips for Avoiding Breach of Contract Litigation

Typically, most business people do not want to be in a situation where they feel compelled to get out of a contract before the end of the contract term .. There are some common defenses to a breach of contract, including if the business has suffered as a result of a natural disaster or one of the parties cannot fulfill the terms of the agreement because of some unforeseen circumstance.

However, sometimes there are other situations that force parties to an agreement to terminate a contract. If it becomes necessary to do so, the following precautions should be taken:

Review the Contract

Review the contract, including any amendments, letters or emails that may have either originally formalized the agreement or later modified it. Pay particular attention to whether the contract contains any provisions that specify whether a penalty may be assessed for a breach or early termination, and whether early termination entitles the other party to recover liquidated damages. “Liquidated damages” are allowed in Florida if the court finds the contract clause is valid and enforceable. However, a liquidated damages clause may be found unenforceable if the provisions establishing these types of damages generally impose unnecessarily onerous obligations that may far exceed any damages allowed for a typical breach.

Discuss your Dilemma with Legal Counsel

Usually the language of a contract may either be difficult to understand or difficult to interpret as to its legal effect, even where the plain meaning is clear. Your attorney can discuss the exposure to liability and also recommend a course of action for dealing with it.

Take the Direct Approach

Approach the other party to the agreement to see if a settlement can be negotiated. Being up front with the other party may relieve you from liability for bad faith or malicious dealing, and it may preclude the possibility of having to settle the matter through litigation. If you choose this step, be sure to consult with legal counsel on the best approach. In some instances, you may combine a personal chat with the principal of the other company with a follow-up by legal counsel.