One potential reason for litigation between businesses is when the two have a contract and one side alleges that it has been breached. This can sometimes be resolved through negotiation and mediation, but it may also require litigation in court.
While the specifics of every contract are going to be unique to that business relationship, there are three main elements that need to be demonstrated during a breach of contract lawsuit.
There was a valid contractual agreement
First, is important to get contracts in writing and to make sure that all appropriate documentation has been preserved. To take legal action for an alleged breach, it’s necessary to demonstrate that there is a valid contract between the companies.
Performance issues
Second, the performance or nonperformance of that contract must be considered. For instance, one side may allege that they fulfilled their obligation by providing services or products and that the other party breached their obligation by failing to pay properly. Nonperformance is not the only reason for a contract breach, however. It could also be based on something like a critical missed deadline.
One party suffered damages
The party that did perform appropriately under their contractual obligations then has to show that they have suffered harm due to the other party’s failure. This harm may be very clear in an example like the one noted above, where one party simply did not pay.
However, it can be more complex in other cases. For instance, if a materials supplier missed a deadline, the company that was supposed to receive those materials may need to demonstrate that the breach impacted their production, their sales and thus their ability to earn.
When navigating a contract breach case, it can be very helpful to work with an experienced law firm and explore all of your options.