How to mediate contract breaches as a SMB

Running a successful business is no easy task, and having to deal with contract breaches makes things even more difficult.

With global times facing difficulties due to the pandemic, the industry for small and medium sized businesses has never been tested to this extent. As businesses and individuals are faced with new challenges, more and more contracts are being breached.

Whether it’s a supplier’s failure to deliver goods paid for, or a customer’s failing to pay an invoice, contract breaches are commonplace in the world of SMBs. 

Here is what you need to know about contract breaches, business liability, and the suitable legal recourse for your business.

What constitutes a breach of contract? 

Breaches of contract happens when one party fails to fulfil the agreed obligations placed under the contract.

It is defined as an action, or inaction, which violates the terms of a legally binding agreement. The legal solution of a contract breach is typically a court order to complete the obligation and/or to pay damages to the affected party. 

Most common forms of SMB contract breaches

While contract breaches can take different forms, the most common situations for SMBs include :

  • Money owed for goods or services delivered – examples include failure of a customer to pay for goods or services delivered by a business.
  • Faulty goods – where the goods purchased are faulty and need to be refunded. This includes goods that fail to perform its represented function.
  • Faulty work – examples include faulty work carried out by a tradesperson in your place of business and the final work is unsafe, inadequate, or does not fulfil its function. 

In all of the aforementioned cases, there has been a breach of the terms of contract involving a business transaction. 

Further common contract breaches include a breach of the partnership agreement, which is an internal business breach of contract. 

Liabilities in contract breaches

If you are the affected party of a breach of contract, you will need to prove that the other party has legal liability. This will show that they are responsible for the breach. To prove legal liability requires a form of legal action, or alternative dispute resolution. 

In some instances, liability insurance may cover the contract dispute. 

Mediation for contract breaches as an SMB

Litigation comes with a hefty legal bill associated with the long time it takes to resolve a case in court. With lawyer hourly rates ranging from $350 to $650, depending on qualifications and experience, daily court costs can reach as high as $3,000 or more. 

The extravagant costs associated with traditional litigation makes online mediation that much more appealing with costs being cut by as much as 98%.

The online mediation process works the same way as traditional mediation with all the advantages of flexibility in time, logistics, and case management. Cases are handled by a qualified, expert mediator who is responsible for helping parties work together to find an amicable solution that is practical and suitable for all parties.

With outcomes as quick as 30 days, online dispute resolution platforms are becoming a popular form of resolving contract breaches for SMBs. 

Mediation has added benefits beyond cost and efficiency thanks to its non-adversarial approach, that is cooperative instead. This provides businesses an invaluable advantage of maintaining a positive relationship with the other party, especially where there is a long business history or lucrative arrangement.

Get in touch with Immediation today and find out how online mediation can help a contract breach issue for your business. 

 

References 

https://www.choice.com.au/shopping/shopping-for-services/services/articles/legal-fees

https://www.abc.net.au/news/2018-12-20/the-true-cost-of-a-day-in-court/10610408

https://podcasts.apple.com/au/podcast/laura-keily-founder-managing-director-of-immediation/id1176399568?i=1000458423226

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