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Breach of Contract Claims Between Pennsylvania Businesses
Business relationships often depend on contracts to establish expectations, deadlines, payment obligations, and responsibilities. When one Pennsylvania business fails to honor its contractual obligations, the resulting dispute can interfere with operations and create significant financial consequences. A breach of contract claim may provide a legal remedy, but businesses should first understand what constitutes a breach, what damages may be available, and what steps should be taken before pursuing litigation.
When Does a Pennsylvania Business Breach a Contract?
A breach of contract generally occurs when a party fails to perform an obligation required by a valid agreement. Depending on the circumstances, a business may breach a contract by failing to pay, refusing to provide agreed services, delivering nonconforming goods, missing an important deadline, or failing to perform another material obligation.
The contract itself is often the starting point for determining whether a breach occurred. Businesses should carefully review provisions addressing performance requirements, payment terms, notice, warranties, termination, dispute resolution, and limitations on liability.
For transactions involving the sale of goods, Pennsylvania’s Uniform Commercial Code may also apply. Title 13 of the Pennsylvania Consolidated Statutes contains Pennsylvania’s Commercial Code, including provisions governing contracts for the sale of goods.
Proving a Breach of Contract Claim
A business bringing a breach of contract claim generally needs to establish that a contract existed, identify the contractual obligation that was violated, and demonstrate that the other party’s failure to perform caused legally recoverable harm.
Documentation can become particularly important when the parties disagree about what was promised or performed. Contracts, amendments, invoices, purchase orders, emails, project records, payment histories, and other business communications may help establish the parties’ obligations and what occurred.
Businesses should also avoid assuming that every disagreement constitutes a material breach. Contract language and the facts surrounding the dispute can determine whether a party actually failed to satisfy its legal obligations.
What Damages Can a Pennsylvania Business Recover?
Damages in a breach of contract case are intended to address losses caused by the breach. Depending on the circumstances, a business may seek compensation for financial losses that can be established under applicable Pennsylvania law and the terms of the agreement.
The contract may also contain provisions addressing damages, attorneys’ fees, interest, or other remedies. Pennsylvania businesses should therefore review the entire agreement before deciding what relief may be available.
Timing matters, too. Under 42 Pa.C.S. § 5525, many actions based on written contracts must generally be commenced within four years. Certain contracts and claims are subject to different limitation periods, including contracts governed by specific provisions of Pennsylvania’s Uniform Commercial Code.
A Contract Dispute Does Not Always Have to End in Court
Litigation is not necessarily the first step in resolving a business contract dispute. Depending on the agreement, the parties may have requirements involving written notice, negotiation, mediation, or arbitration before a lawsuit can proceed. Even when litigation is available, early negotiations may provide an opportunity to resolve the dispute while limiting disruption to the business.
The key is to understand the company’s contractual rights before taking action that could affect its legal position.
Protect Your Business Before a Contract Dispute Becomes a Bigger Problem
A breach of contract can disrupt revenue, business relationships, and future opportunities. Pennsylvania businesses facing a contract dispute should have the agreement and surrounding circumstances carefully evaluated before deciding how to proceed. Beckley & Madden, LLC represents businesses in Pennsylvania contract and commercial disputes. Contact the firm to discuss your situation and learn how experienced legal counsel can help protect your contractual rights and business interests.