When someone breaches a contract, the other party may consider a lawsuit as a response. For instance, perhaps you are a business owner, and you had a contract with another local business. They violated this contract by missing the deadline.
To seek compensation, however, you have to show that the breach of contract caused financial damage to your company. There has to be some type of documented loss, which is the reason that you’re seeking that compensation in the first place. This is not always the case, even when the contract was breached.
How does the missed deadline affect you?
For instance, perhaps the other business is a parts supplier. They missed the deadline for a delivery.
On one hand, perhaps this had a significant impact on your company because your own employees couldn’t be productive without the parts and materials they needed. You lost valuable time waiting on a shipment that was late. You may also have lost sales because you couldn’t ship products to retail centers or end consumers. Maybe you had a contract with a store to deliver finished products on time, which will now also be late, harming your business in terms of sales and reputation.
On the other hand, perhaps the shipment was late, but you had other parts in inventory. You didn’t actually lose any productivity or miss any sales. It’s certainly an inconvenience that the shipment was a day or two behind schedule, but it didn’t financially harm your business. In the first scenario, you may be able to seek substantial compensation, but it can be much more difficult in the second.
These types of disputes are complex, and demonstrating financial losses is just one aspect to consider. Be sure you understand all of your legal rights and options.