In many cases where two businesses are involved in an alleged breach of contract, it’s because products or services were never rendered. For instance, you might own a company and order a shipment from a supplier, providing payment in advance. But if the shipment never arrives, you may decide to start a lawsuit to reclaim the money you lost. In such a situation, the contract was clearly breached by the other company.
However, there are also cases where a deadline is missed, but the obligation is eventually fulfilled. For example, the shipment may arrive late. The supplier might argue that they didn’t really breach the contract because they provided the supplies you ordered. Yet, a missed deadline can still qualify as a breach of contract if it causes financial harm to your company.
Does the missed deadline impact your ability to earn?
The critical factor is whether missing the deadline negatively impacts your company’s ability to fulfill its own obligations and earn revenue.
For example, suppose your company manufactures products using the supplies you ordered. You have contracts with local retail centers to deliver orders on time. You also ship products directly to customers who purchase them online.
If the supplier delivers the shipment a week late, your company’s production numbers could plummet. As a result, you may fail to fulfill your contractual obligations to individual customers or retail centers, leading to lost sales. Additionally, those retail centers might cancel their contracts with you, viewing your company as unreliable, which could result in significant revenue losses in the future.
Taking legal action
Even a relatively minor contract breach can have major consequences. If you find yourself in this position, be sure you understand all of the legal options available.