Vendor contracts are important for a business’s operations. The terms set in the contract can ensure a steady stream of necessary supplies. A price commitment can help the organization control costs and predict its future profits.
Unfortunately, vendors do not always fulfill their contractual obligations. They may suddenly stop making deliveries, may become inconsistent about timing or may even refuse to honor the pricing that they agreed to in the contract.
What steps do business leaders frequently need to take when dealing with a vendor contract breach?
Validate and document the issue
When a business leader believes that a vendor has breached a contract, reviewing the terms of the contract is often the first step required to resolve the matter. Once they have validated that the situation does, in fact, constitute a breach of the written agreement between the organizations, they can then gather documentation of the breach.
Screenshots or printed copies of electronic communications about delivery delays, canceled shipments or price adjustments can help affirm that a breach occurred. Photographs of the goods and materials delivered could show that the vendor has not met quality standards or delivered the wrong items.
Request an amicable resolution
Situations ranging from an employee’s leave of absence to supply chain disruptions might theoretically explain why a vendor breached a contract. If a client organization reaches out to address the issue, the vendor that breached the contract might agree to correct the situation.
In some cases, informal communication about a contract breach can be enough to resolve a vendor dispute. If a vendor does not agree to amicably resolve the matter in a prompt fashion or ignores informal communication, then sending a formal written notice advising them of the contract breach is likely necessary.
Ask for court intervention
If a vendor has not responded to informal communication or official notice regarding the contract violation, then litigation may be necessary. When there is proof of a breach of contract, the plaintiff organization affected by the breach can ask the courts for a number of different remedies.
A judge can issue contract rescission, thereby terminating the working relationship between the business and the vendor. Judges can issue injunctions or orders of specific performance as a means of enforcing the terms of the contract. They can also award damages in scenarios where contract breaches have verifiable economic consequences.
Working with an attorney is usually necessary when reviewing the terms of a contract and attempting to remedy a vendor contract dispute via business litigation. Legal support can make it easier for business leaders to document issues and evaluate different solutions based on the impacts that a breach has caused.
