Successful contract negotiation takes a lot of foresight. The terms of these agreements can have long-term consequences that can define business relationship for years or even decades. But while thoroughly negotiating and carefully drafting the terms of a contract is important, equally crucial is the enforcement of those terms. After all, a party that doesn’t take action in the event of a breached contract is left with no recourse. This means that it will essentially be taken advantage of without punishment for the financial harm it is causing to the other party.
To see just how important the policing of contract terms can be, just look at recent legal action taken by Panera Bread and three of its former employees. According to the legal action, which was just released for being filed in the improper venue, the employees breached non-compete agreements when they were offered jobs by a company headed up by former Panera CEO Ron Shaich.
Shaich states that he had come to an agreement with Panera when he left the company last year whereby he could solicit former Panera employees as long as Panera was made aware of any job offers and was given the ability to negotiate with those employees in hopes of retaining them. He now says that Panera breached that agreement by firing the three employees in question.
Although this case was dismissed, it will likely come back to light when it is filed in Delaware, which is where Shaich’s company is housed. The outcome of such a claim is unknown, obviously, primarily because we don’t know the exact wording of the non-compete agreement in question, and do we know if Shaich’s agreement with Panera was commemorated in writing.
Regardless, this case highlights the importance of contracts and the enforcement of their provisions. Here, by not taking action, Panera could put itself at risk of having protected company information regarding operations and business strategies falling into the hands of a competitor. This is why Panera, and other businesses facing contract issues, need to make sure they have a strong business litigation team on their side before moving forward with its claim. This not only protects the business but could help protect the individuals involved.