Contract disputes are common in business, and many can be resolved in a timely and amicable manner. However, some disagreements over the interpretation or application of a business contract can lead to serious consequences for both the company and the client.
Contract Breach
When a contract breaks down and the arrangement gets stalled, your business may suffer as a result. The customer may refuse to make payments as agreed, or he or she might insist on differing terms, such as an expected product accessory or extended warranty plan. You as the company owner could interpret the contract differently, leading to disagreements that cannot be easily resolved. If you are unable to fulfill the contract terms as demanded by the customer, both parties will be unsatisfied and negative consequences may result.
Delayed Payments and Service
When a dispute arises, the customer may stop payments until the problem is addressed to his or her satisfaction. Missed payments can adversely impact company operations, and depending on the company size, lead to profit loss, which can hurt the budget. In return, the company will halt the processing of contractual terms, which may lead to the customer not receiving expected goods or services.
Legal Issues
If the problem becomes a legal issue, it will need to be addressed by a business lawyer with experience in contracts. An attorney who is experienced with business contract law can clarify the contract’s terms and conditions while explaining how the law interprets them. This provides an objective approach to resolving tensions and restoring the contractual process between the company and the client. Generally, it is best to contact a business lawyer early in the disagreement so that resolution can be reached as quickly as possible. The longer the dispute continues, the more difficult it will be to correct, and bad feeling may linger on both your side and the customer’s.
Losing Customers
Frequently, the worst case scenario is to lose the customer’s good faith over a contract disagreement. Unless the customer is exceptionally difficult, it is often advisable to retain the customer, as it is more costly to find new replacements than to hold on to existing clients. In addition, a dissatisfied customer on average will tell 20 people, and they may decide not to do business with you based on that person’s experience. Word of mouth is powerful.
For best results, consult an attorney to sort legal issues. Also, display courtesy to the customer while negotiating the contract.
Author Info: Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on Twitter and Facebook: @RachelleWilber.
