In the BreachPosted: April 17, 2014
Having dealt with breaches small (missed deadlines for clients’ contributions to a project) and large (non-payments well over $150,000), I’ve learned to respond with a series of quick, assertive, proactive steps the moment I realize the breach.
I’m not an attorney, and this post isn’t offering legal advice. But here’s how I handle breaches of contract with the wisdom of hindsight.
Much like good receivables management, which really is just a process for managing contract breaches of delayed payment, a quick phone call usually takes care of infractions. Immediate contact alerts the other party that I’m paying attention and will not tolerate non-compliance. I ask for a clear commitment to resolve the breach quickly.
I take any delays about commitment from the other party very seriously. Especially in the case of breaches that impact my ability to perform on a contract or my compensation. I escalate immediately with a written request for compliance and response within the week (or even day if the breach has paused production.) I escalate again with a call to the highest authority in the other party’s realm, and follow up in writing. In total, I allow no longer than 2 weeks for resolution. Setting a deadline assures I don’t creep beyond the window for likely resolution.
If at this point, the breach remains, I proceed with legal action. Again, I march at the quickstep to minimize my investment of time, energy and legal costs. I insist my legal counsel proceed assertively – I’ve already given the other party plenty of opportunity for the easiest response. If I get as far as legal response, I go in aggressively, swinging my biggest stick, to get what my counsel advises is my most likely outcome of our pursuit.
I have made a mistake in extending too much slack hoping to preserve the relationship. What I have learned is that relationships worth preserving are mutually-respectful and committed to contract compliance. Enforce your agreements, cut any losses as soon as possible, and get back onto work with those worthy of your contractual integrity.