The consequences of breaking your contractual promise

While this blog admittedly has a bias for written contracts, as such contracts (ideally) detail the obligations of each party to the contract, it is important to realize the consequences of not undertaking the obligations in the contract.

Contracts are legally enforceable promises.  For example, you promise to cut the hay by August 1 and the landowner promises to pay you for your work.  If you cut the hay on September 1, you are in breach of the contract and the landowner can institute legal proceedings against you for the breach (that is, breaking your promise).

A breach of contract may carry significant consequences.  A court of law may order you to pay damages to the other party due to the breach.  This means a court of law may require you to keep your promise, regardless of the financial consequences to you and/or your operation.

There are other potential consequences outside a court of law.  The other party may withhold payment until your promise is kept.  Legal recourse may be threatened and/or initiated, with the likely result of high stress, attorney fees, and uncertainty of the outcome.  Longer-term consequences may include the other party no longer contracting with you and encouraging others to not contract with you as well.

Keep in mind that as you add more and more obligations to your contract, there are more and more ways for a potential breach of contract to occur.  You want to ensure that you are capable and willing to meet all your contract obligations.  This means reviewing any proposed contract with a fine-tooth comb and, if you do not understand the contract, contacting an attorney licensed in your state.

Want some more tips on contract drafting and review?  This is a wonderful publication.  Have more questions or concerns?  Contact us as we are here to help.