The contracts that you sign with your employees, suppliers and clients clarify your relationship with those parties and help protect your business. While you may do everything in your power to uphold your contractual obligations to others, not everyone will be so diligent.
There are, unfortunately, people who sign contracts that they have no intention of fulfilling. The failure of another party to follow through with their contractual obligation to your company could result in significant financial losses.
Do you have to take a breach-of-contract claim to court in order to settle it?
Filing a lawsuit can help you gain momentum
It will usually be cheaper and more private to settle a contract dispute with the other party outside of court. Ideally, they would agree to negotiate as soon as an issue arises, but that is not always the case.
Sometimes, only the possibility of going to court and losing will convince someone to sit down and negotiate. If the other party to the contract has not been cooperative so far, filing the paperwork to start a lawsuit could motivate them to cooperate. They might reach out to negotiate with you or finally agree to alternative dispute resolution while you await your day in court.
You can resolve many disputes without going to court
Realizing that a judge will hear the case if they don’t resolve it with you amicably could push the other party into compliance or at least willingness to negotiate. You could try sitting down with just your attorneys to resolve the issue together.
If you worry about preserving the relationship you have with the other party, then alternative dispute resolution systems liked mediation or non-binding arbitration could be particularly beneficial. You can discuss the matter that led to the dispute and try to find a solution that works for both parties.
If mediation, collaboration or arbitration is successful, then you can withdraw your court filings and move on with your business relationship. If you cannot resolve the issue on your own, then you will still have the option of litigating your contract dispute after attempting to settle it outside of court. Knowing your options will empower you as you face a serious contract issue that could damage your company.