Running a business in Ohio often involves working with vendors to grow the business and help you complete your projects. Although ideally vendor relationships will run smoothly, sometimes a vendor or supplier breaches their contract.
This can disrupt your business operations and potentially lead to losses, leaving you wondering what to do. Before deciding to file a lawsuit, here are some preliminary steps to take.
Review your contract
Review the terms of your contract carefully, specifically the clauses involving payment terms, deadlines and what to do if the contract is breached. Before acting, you want to make sure you know exactly what clauses your vendor violated and your potential remedies.
Next, contact the vendor. Sometimes a contract breach is the result of miscommunication or misunderstanding. A conversation with the vendor could resolve the issue. If it does, memorialize the conversation and any agreed-upon terms in writing.
Gather evidence
When talking to the vendor does not resolve the issue, start gathering evidence to prove the breach. Evidence is crucial to showing that the vendor failed to fulfill their obligations under the contract.
Written correspondence such as letters or emails, photos, videos or invoices are examples of evidence that can prove breach of contract. It may help to gather this evidence before contacting the vendor. Having evidence to prove the breach may make the vendor more receptive to resolving the issue.
Send a demand letter
The next step is sending a demand letter. This is a letter listing the contract clauses that the vendor breached and any damages you believe you are owed.
Consider the wording of your contract before sending the letter. Vague language or clauses might mean you do not have a strong enough case to claim damages.
Receiving the demand letter may make the vendor more receptive to speaking with you or attempting to resolve the problem without litigation.
It is best to work with a professional when drafting and sending a demand letter. Certain language you include in the letter could be used against you, so you want to make sure the letter is worded carefully.
Consider mediation
Before heading into court, you may want to consider mediation. Litigation is often costly and lengthy. You are dependent on the court’s schedule, which means it could be weeks, months or longer before your case is heard.
Mediation is a meeting between you, the vendor and a mediator. The mediator is a neutral third-party who listens to both sides and tries to facilitate a resolution to the situation. Their job is to encourage two-way conversation and allow each side to be heard.
Benefits to mediation include saving time and money, as well as preserving the relationship with your vendor. Problems that are resolved through mediation often save business relationships. Alternatively, contentious courtroom proceedings frequently cause a breakdown and permanent severing of relationships.
A breach of contract by a vendor can have a disruptive effect on your business. Before filing a lawsuit, take the steps above and seek advice and guidance.
