It is very common for a party to claim a breach of the contract and consequent damages from the other.
When a party is are called upon to pay damages for a violation of a contract, there are several safeguards it should keep in mind.
Here are some key considerations:
Review the contract
First things first. Verify the obligations, rights, and responsibilities of each party as defined in the contract. Examine the concerned terms and conditions of the contract particularly to ensure that the alleged violation has indeed occurred.
Analyse the alleged breach.
Determine the nature and extent of the breach. Is it a minor or a material breach? Has material breach been defined under the contract?
Evaluating the seriousness of the breach may help in understanding the potential liability and choosing an appropriate course of action.
Mitigate damages
The party alleged to have breached the contract should take reasonable steps to mitigate or minimize any potential damages or losses occurring to the other party from the breach.
Seek legal advice
Engage a qualified legal expert experienced in contract law. He / She can provide advice on the best course of action, assess potential defenses or counterclaims, and help navigate the potential legal process.
Create Documentary evidence
Capture and preserve any relevant evidence supporting your defence, position and contentions. This may include correspondence, agreements, invoices, receipts, or any other documents that can help substantiate your case.
Review the amount of damages sought
Evaluate the amount of damages claimed by the aggrieved party. Assess whether the amount is reasonable and proportionate to the actual harm it has suffered or not. If the damages seem excessive or unreasonable, this could be a point of denial, negotiation or defence on your part.
Try to negotiate or settle amicably
Explore the possibility of resolving the dispute through negotiation or settlement discussions. This will very likely save time, money for both parties, and maintain a better business relationship with the other party.
Follow procedural requirements
Play strictly by the book as much as possible. Follow any procedural requirements or deadlines, e.g., providing notice of the breach or filing any necessary documents within the specified timeframe as stipulated in the contract. Failure to comply with procedural requirements could negatively impact your defence.
The above is a general discussion only. In addition, it is advisable to consult with a legal professional to understand the specific laws and regulations applicable to your jurisdiction and situation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
