If you are in business long enough, at some point, you will encounter a contract dispute. Understanding what is at stake can help you make the right decisions about how to handle it.
If someone lets you down, you might feel upset and want to react straight away. Yet you need to look at the larger picture before acting.
If a contract disagreement escalates, it will be bad for business
Here are some things to consider when deciding what to do about a contract issue:
- Money: What financial damage have you suffered, and what amount of money can you hope to get by taking action? For example, if your raw materials supplier let you down, you may have been unable to manufacture, therefore unable to ship to customers. If your reputation is damaged, it may cost you future sales.
- Friendship: How do you put a value on a friend? It depends on the nature and depth of the relationship. Not all contract disagreements need to lead to a falling out.
- Future projects: Don’t quarrel over cents if doing so will cost you dollars. If you handle this problem well, it could increase your chances of a lucrative future contract with the other party. If you take a hard line, they might look for a new partner.
- Time and stress: You know you are right and the other person is wrong. Yet, how much time and energy are you prepared to spend showing that? Going to litigation will not be fun for either of you.
It is crucial to understand the legal options available if you have a contract problem. Once you know how far you or the other party could go, you can weigh whether you want to reach that point or whether it benefits you to seek an earlier solution.
