Basics of Pennsylvania contracts for small business owners

On Behalf of | May 9, 2017 | Blog

As a business owner, you can expect to sign a lot of contracts. You will enter into contractual relationships with vendors, customers, service providers and employees. Knowing how contracts work can help you deal with some common problems.

First of all, you need a valid contract if you want performance to be legally enforceable. Generally, a contract may be verbal or in writing if it does not deal with the sale of goods over $500. In practice, you may encounter a lot of difficulty proving the existence or terms of such an understanding. Generally, the best way to reduce the chance of a dispute is to prepare a written, detailed and clear contract. You may prefer to retain a lawyer for this task, especially for more complex types of agreements.

What type of breach can you sue over?

If the other party to your contract fails to hold up his or her end, you can pursue legal action for breach. However, a minor violation of contract terms will not suffice; courts want to see a material breach before they consider action. The difference between minor and material can present a hotly disputed issue and will often depend on specific circumstances. For example, delivering goods an hour after the specified time will not make much of a difference in most cases; however, in others, it can cause serious problems.

What types of damages can you recover?

The goal of filing a breach of contract action is to force the breaching party to compensate you for damages that result from failure to meet his or her obligations. Courts may award monetary damages for the amount you lost directly because of the breach. Sometimes you suffer inconvenience rather than substantial financial loss; in such cases, you may get nominal damages. Some contracts may specify liquidated damages, i.e. a particular amount. In some cases, the court may opt for equitable remedies such as forcing the breaching party to perform.

Contracts form the backbone of any business operation. Whether you want to draft a comprehensive contract or have questions about handling a vendor or client who fails to meet obligations, an experienced contract attorney can help you understand and pursue the optimal legal remedies for your situation.


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