Are you involved in a business dispute over a breach of contract for failing to pay? The failure to pay for contracted goods or services is absolutely a breach of contract. But how should a business manage the situation?
In some cases the decision is made to send an account to collections, in effect writing off a substantial portion of the balance while closing the door on this business partner. There are other strategies. Business litigation is expensive and time consuming, but it is often in the best interest of a corporation or business. There is much more actual cost to a business than the original failure to pay. There are damages associated with the impact of the failure to pay, as well as the loss of opportunity associated with substantial business funds.
The breach of contract for failing to pay unfortunately happens in almost any type of business transaction. It is often associated with construction projects, mechanics liens and homeowners who are contracted to provide “draws” or payment upon project completion. It can also be related to an “ongoing” contract or project. If a homeowner, general contractor or other party decides to withhold payment, they must consider whether this action actually contributes to a material breach of the original contract.
For example, if a contractor building a deck was contracted to use a higher quality material in the construction, and used sub-standard materials the customer may believe they are right to withhold payment. There may be an issue created by the non-payment that further complicates the legal argument, ultimately precluding them from seeking damages and costs associated with finding another contractor to repair or replace the original work with the higher quality materials specified in the original agreement.
A breach of contract for failing to pay may relieve the victim of the breach from their obligations under the contract. These questions can be quite legally complex, and it is important to seek the advice of experienced San Diego contract attorneys. The Watkins Firm has advised clients in failure to pay and other breach of contract cases for more than four decades.
We invite you to review our podcast Episode 5 – Breach of Contract as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
