Strategies and Options for Resolving Business Disputes with Vendors
Ragain & Clark December 16, 2022
Disputes involving suppliers or service providers are among some of the most common types of disputes that business owners face. Some of these disputes can be successfully resolved without legal intervention while others may require litigation. Understanding your options and thinking strategically can help you not only resolve your dispute but also save you time and money. If you are engaged in a vendor dispute, you can maximize your chances of a successful resolution by leveraging the knowledge and experience of a seasoned business dispute attorney.
Consider the Relationship
A common mistake that business owners make when dealing with a breach of contract claim is over-focusing on what their legal remedies may be. While you should follow any contractual requirements concerning the breach, you typically do not have to take immediate action. If your vendor is suddenly struggling to perform under the contract, taking immediate legal action could poison a relationship that you may be difficult to replace. Some points to consider:
- Would terminating the relationship have a negative impact on your business beyond the immediate breach?
- Is there something unique that this vendor has that other vendors cannot provide?
- Is this an isolated incident or part of a pattern?
- Is there a viable future with this vendor?
Review Your Contract
The first thing you should do is review your contract to understand what steps must be taken in the event of default. More than likely, it outlines certain steps that you must take in the event of a “material” breach. Material, in this context, is synonymous with “significant.” While the contract probably doesn’t define what would be considered a material breach, it is important to understand that minor breaches probably do not trigger whatever remedies you might have under the contract.
At this point, you just want to position yourself to take legal action should you need to. As a result, you should provide any notice required by the contract exactly as it is laid out. For example, do not send an email when the contract requires that you send a letter via certified mail. You should also pay attention to any provisions that give the vendor the right to cure the breach.
Talk it Over
In addition to sending a notice to the vendor concerning the breach, you should also plan to have a candid conversation with them about how you expect the situation to be resolved. You should also be prepared to discuss what the vendor can realistically do to cure the breach. If the relationship is valuable to your business, you may want to consider whether there are accommodations you can make to assist the vendor in curing the breach.
If you are able to come to an agreement for moving forward, you should consider memorializing your conversation in writing. However, you should be careful to not waive any rights you may have under the contract. An experienced business dispute attorney can help you through this step to make sure that your rights are protected while also confirming what was agreed upon.
Is Termination an Option?
Many contracts include an option to simply terminate the contract and walk away. You may not be entitled to any damages, but this can be an attractive option when dealing with an underperforming vendor where you are not quite sure they have breached the contract. These contracts often allow for termination “with cause” and “without cause.” Terminating the contract without cause typically requires more notice but allows you to terminate the contract without a specific reason. Termination allows you to move on with minimal disruption to your business and avoid the potential costs associated with pursuing legal action.
If You Have to Litigate, Understand Your Remedies
Unless your remedies are limited by your contract, you may have several different options to choose from. You may be able to pursue more than one remedy, although not every option makes sense in every case. Here are some of the remedies that you may be able to pursue:
- Money damages: this is the financial harm that your business has suffered as a result of the breach.
- Specific performance: this is where you ask the court to require the vendor to perform the contract according to its terms.
- Recission: this is where you ask the court to set aside the contract as if the parties had never had a contract to begin with.
Call the Business Dispute Attorneys at Ragain & Clark Today
The business dispute attorneys at Ragain & Clark have decades of experience in helping Wyoming and Montana businesses resolve their vendor disputes. To schedule a consultation, call us today at 307-388-6400 (Worland) or 406-651-8888 (Billings) or send us an email.