If you agree to a certain amount of product from a supplier, they have a contractual obligation to deliver the specified quantity, price and delivery date. A breach of contract occurs when one party does not execute their duties as set by the agreement. For example, if your supplier delivers fewer units of the product, delivers them late or charges more than agreed, they have breached the contract.
Measures of damages for a contract breach
While there are different ways to measure the damages for a breach of contract, you must know the measure of compensation you can get depending on how much harm the supplier’s actions caused. You may not be able to sell products now because the supplier did not do their part, but you can seek justice through a measure of various forms of damages:
- Expectation damages: This is the cash value you expected to gain if they wholly followed the contract.
- Reliance damages: This is the amount of money you spend in reliance on the contract. For example, if you paid for advertising or storage costs for the product, those expenses would be under reliance damages.
- Restitution damages: This is the monetary amount the supplier gained from breaching the contract.
The question of whether a supplier should compensate a business owner’s losses due to a breach of contract could depend on a number of factors. However, if the breach has caused substantial losses to the business, compensation could be appropriate.
How mediation can help your business
Mediation can be a valuable way to obtain compensation for your losses. Plus, it is typically more flexible than court proceedings. If everyone involved agrees to use mediation and comes to a settlement that includes damages, they can enforce it as a contract.
The goal of mediation is for everyone to agree on a solution. So, any damages, like expectation, reliance or restitution damages, could be included in the mediation if both parties agree to it.