Running a business in Florida involves countless agreements, from supplier contracts to client services. Ideally, every deal goes smoothly, but in the fast-paced world of commerce, disputes are an unfortunate reality.
Understanding common commercial contract disputes can help Florida businesses protect their interests and navigate challenges when things don’t go as planned.
At its core, a contract is a legally binding agreement between two or more parties. It outlines the promises made and the expectations for each party. When one party fails to uphold their end of the bargain, it often leads to a “breach of contract” dispute.
Under Florida law, for a contract to be valid, there must generally be an offer, acceptance, and consideration (something of value exchanged). In certain limited circumstance it must be reduced to writing to be enforceable, e.g., a promise to pay another’s debt or real estate transactions.
Common Commercial Disputes You Might Encounter:
- Non-Payment for Goods or Services: This is perhaps the most straightforward and frequent dispute. A business provides a service or delivers products as agreed, but the other party fails to pay. This can severely impact cash flow and operational stability.
- Failure to Perform or Deliver: Conversely, a business might pay for goods or services that are never delivered, are delivered late, or are of substandard quality. This can disrupt your operations, damage your reputation, and lead to your own breaches with your customers.
- Breach of Partnership or Shareholder Agreements: Internal disputes among business owners can be particularly damaging. These often stem from disagreements over management decisions, profit distribution, or one party violating terms set out in a partnership or shareholder agreement.
- Vendor and Supply Chain Disruptions: With complex supply chains, issues with third-party vendors—such as delays, quality control problems, or breaches of confidentiality—can cascade, affecting your ability to meet your own commitments.
When a breach occurs, the non-breaching party may seek various remedies, most commonly monetary damages to compensate for losses incurred or specific performance requiring the breaching party to fulfill its obligations under the contract.
Clear, well-drafted contracts are your first line of defense, outlining responsibilities, timelines, and dispute resolution mechanisms.
The contract may dictate what state law applies to any dispute, whether alternative dispute resolution must be sought before a lawsuit is instituted, whether there are limitations on damages, and if the prevailing party is entitled to attorney’s fees and costs.
When a disputes arise, understanding your legal standing under Florida’s contract laws and seeking prompt legal counsel is crucial to protecting your business.
Moreover, delayed inaction may result in evidence being lost, memories of crucial witnesses fading, and litigation claims being barred by applicable statutes of limitation.
David’s Dicta: The Florida Bar published a thoughtful article titled, FIFTY TIPS FOR WRITING THE 21ST CENTURY CONTRACT THAT STAYS OUT OF COURT in November 2000. The tips in there are as relevant now as when it was published.