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Who Determines Breach of Contract?

Contracts can be complex in many different angles, so who actually has the ability to determine when one has been breached and start pursuing legal action against the party who breached it? To better understand, let's take a look at what exactly a breach of contract entails and figure out who has the right to file one of these suits.

Is There a Breach of Contract?

Who is eligible to file for breach of contract depends largely on whether or not a breach occurred, and if so, how? First, you must ask if a contract ever existed. Not all contracts are in writing, but if there was never an agreement in the first place, you can't sue for breaching it. Next, determine if a breach of the terms actually occurred, if the breach is large enough to warrant filing a suit over it, if you sustained and damages as a result of the breach, you adhered to your duties as outlined by the contract, and if you're still within the statute of limitations to file your lawsuit.

Who Makes the Determination?

In short, anyone who is directly involved with the contract may determine if a contract has been breached, including both direct first parties and in some rare cases, a third party who is directly affected by the contract breach.

Let's take a look at a few examples. Say Company A produces refined wood they then sell to Company B, who creates kitchen knife handles. These two companies have a direct, contracted agreement that Company A will sell a specific amount of wood materials to Company B, who will pay a specific price for them. However, say Company A decides to raise their prices for other buyers, and decide to start shipping less to Company B to accommodate for this adjustment.

In this instance, Company B, who no longer receives the amount of wood they need to keep up with their own demand, will see damages in the form of lost sales and possibly lost customers and contracts of their own, could determine that Company A breached the terms of the contract by failing to send the right amount of material while the contract was still active.

However, let's say Company B sells their knife handles to Company C, who uses them to create full kitchen knife sets. Company C, even though they are not directly involved in the contract between Company A and Company B, is considered a third-party beneficiary of this contract and can determine that the contract was breached. This means Company C could potentially file a breach of contract lawsuit against Company A because their actions have indirectly harmed Company C's ability to run their business.

Have you suffered from a breach of contract? Learn more about your legal options by calling The Hunnicutt Law Firm today at (214) 361-6740 and speaking with a Dallas business litigation attorney!We offer a variety of services, including alternative dispute resolution!

 

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