Broken sales agreements often leave companies in an awkward position. They may have invested significant time and money in the process. Sometimes, they’ve shared trade secrets with the partner that ultimately backed out of the sales agreement. In any case, a trusted partner has let them down in terms of trust at the very least. It’s a frustrating situation. Is civil litigation the best way to handle a broken sales agreement? In some case mediation or a new negotiation may be the best approach. In more extreme cases, civil litigation may be the best approach, depending on the circumstances.
In legal terms, broken sales agreements are typically referred to as “breach of contract”. These agreements can be broken for a wide variety of reasons. The other party could experience unexpected financial difficulties. Other events might cause the breach of contract like problems in the business, loss of critical team members or other issues. These types of problems don’t typically lead to civil litigation because they are unexpected and don’t show bad faith on the side of the other party.
Breach of contract can occur when the other party is dishonestly. They may decide that they want to pursue other opportunities and decide to shelve your business agreement. The company might find a more beneficial arrangement and ignore the arrangement that they’ve made with your company. This is the kind of situation where civil litigation might be a viable option. In most cases, these types of civil litigation cases go to small claims court where the injured party tries to recover any financial damages that are caused by the breach of contract.
One consideration when it comes to civil litigation and broken sales agreements is the solidity of the agreement. Is it well written? Are the terms of the agreement clear? If you want a sales agreement that is clear enough to protect you in the event that the other party breaks the contract, it’s a good idea to seek legal counsel to help draft the agreement. If a breach of contract occurs, your attorney can advise you about whether civil litigation is the right step to take in your particular situation or whether you should consider mediation or cancellation instead.