Breach Of Contract

Breach of Business Agreements

Business owners work hard and often risk their personal health as well as assets to give their business the best chance of success. The daily process of doing business can be difficult enough; when an agreement is breached, the health of the business can be in danger.

Agreements are contracts, enforceable promises of the parties. The age old definition of an enforceable contract is an Offer and Acceptance with Consideration to bind the parties. Agreements are important to confirm the terms of every relationship whether with your suppliers, employees or customers.

Historically an enforceable Contract did not have to be in writing but real estate is so important that legislation in British Columbia requires agreements involving real property to be in writing, and bitter experience if not common sense teaches that human memory can be selfish thus contracts should all be in writing to confirm the certainty of the promises exchanged.

An important example of why the terms of an agreement must be clear and certain is the fact that a contract can be found by a court to NOT be enforceable eg when the evidence proves there was no “Meeting of the Minds”. There is no meeting of the minds when it cannot be proven that all parties had the same understanding of the terms of the agreement, such as by a written agreement.

If a term of an Agreement is breached, the basic two choices are to negotiate or litigate. These choices are not exclusive and often it requires litigation (commencing a claim in court) to motivate the other party to negotiate. A judge is an arbitrator who makes the decision because the parties could not. Mediation should be tried since it is an organized form of negotiation, and the parties decide on the outcome rather than risking uncertainty of a trial.

If the contract involves real property or the damages exceed $25,000.00 then a claim must be commenced in Supreme Court; otherwise you can usually apply to the Small Claims Court for enforcement of the contract. The Small Claims Court also has both a Settlement Conference with a judge and mediation services to try and resolve the issues without a trial. It is always best to first seek legal advice.

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Author: Andrew Liggett