Business contracts usually come with stipulations and clauses designed to keep the relationship as fair as possible for both parties. Many clients jump to sign a contract when they need it but may back down when it comes time for their time to fulfill their end of the bargain. Here is what you do when clients breach the contract they have with you.
Inform Your Client of the Breach
Your client may not know about the breach upfront. Reach out to them via their preferred method of communication to make them aware of the problem. Ideally, you can have a conversation over the phone or in person.
Have a copy of the signed contract in front of you with the part in question highlighted for them to read to avoid ambiguity. During your conversation, explain how the client can correct things to adhere to the contract (if possible).
Analyze the Type of Breach
There are four ways to breach a contract. By analyzing the situation and figuring out which breach has been committed, you will be able to better determine how you should move forward.
The four ways to breach a contract include a minor breach, a material breach, an actual breach, and an anticipatory breach.
A minor breach is, as the label says, minor. It’s often not worth pursuing legal action for this type of issue, but you might still want to inform your client of the breach to ensure it isn’t repeated in the future. Meanwhile, a material breach means that the fundamental root of the contract was broken. Your client took action but came out with something significantly different from what was agreed upon. An actual breach usually means that your client simply refused to uphold their part of the deal. For example they may have refused to pay you for your services. Finally, an anticipatory breach is an actual breach that you notice before your client’s deadline. For example, they may have notified you that they won’t have the funds to pay by the deadline. With an anticipatory breach, you can often work out a way to extend the deadline in your contract to prevent an actual breach.
Create Automatic Fines
In some cases, a breach can be made even with a small fine applied to the client’s account as a consequence for the breach. Many companies, such as credit card companies or mobile phone companies, add a fee when someone doesn’t pay according to the due date established in the contract.
Automatic fees set up as part of your operational infrastructure make things easy for you since you don’t have to apply the fees manually. Of course, it’s important to clarify this at the beginning to avoid angry customers. Also, it’s good business practice to offer forgiveness for first-time offenders and established clients who you have a good relationship with.
Call a Contract Lawyer
If a contract breach goes beyond minor issues and simple fines, it’s time to bring in the lawyers. A corporate lawyer will handle a major contract breach in civil court for you. Their experience in contracts will give them the knowledge to win when someone breaches a contract. They can also help you write your contracts to ensure they will hold up in court.
Part of business involves dealing with clients who don’t stick to the mutual agreement. Don’t let a client get away with breaking a contract. Follow these tips to ensure you get the compensation you deserve for your services.
Bio: Anita is a freelance writer from Denver, CO. She studied at Colorado State University, and now writes articles about health, business, family and finance. A mother of two, she enjoys traveling with her family whenever she isn’t writing. You can follow her on Twitter @anitaginsburg.
