A contract dispute can cause significant disruption to your business and cost you time and money. Sometimes contract disputes are unavoidable, but there are steps you can take in the early stages of a potential contract dispute to prevent it from escalating.
Raise the issue of a breach of contract as soon as possible
Many of us do not enjoy confrontation, but staying silent when you believe the other party is in breach of contract could be viewed as you accepting the breach or waiving your right to sue for breach of contract.
Review your contract thoroughly before addressing the breach, including any dispute resolution language. First, you must verify that the other party is truly breaching the contract and you are not misunderstanding or misinterpreting the language.
Second, review any requirements for providing the other party with notice that you believe they are in breach of contract. For example, there might be requirements about how to send notice of the breach, deadlines to send the notice and the contents of the notice.
Keep complying with your own obligations under the contract
The other party might clearly be in breach, but deciding to stop adhering to your own obligations only means you are also now in breach.
Sometimes complying with your own obligations can be difficult or impossible due to the other party’s breach. Take reasonable steps to cover your losses and avoid damage.
A New York court will generally not award you damages that you could have prevented. A breach by the other party does not mean you do not need to try to mitigate your damage.
If your contract does contain dispute resolution language, follow it, but try simply talking with the other party first. Your contract might require arbitration for resolution of contract disputes, but immediately initiating arbitration proceedings without speaking with the other party first could cost you time and money.