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Breach of Contract

Discussion in 'Business Fundamentals' started by Nebraska, Jan 15, 2003.

  1. Nebraska

    Nebraska Member
    from Midwest
    Messages: 32

    Has anyone ever sued a client over breach of contract? My example involves cancellation for another company, for a lower price, w/o 30 day written notice as the contract states.
  2. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    I probably wouldn't. You have to figure if it's worth the expense and aggravation. Then, if you win what are your chances of collecting? Does your contract state that they will be responsible for collection costs in case of default?
  3. seville009

    seville009 Senior Member
    from CNY
    Messages: 877

    What are the penalties of the breach as stated in your contract?

    Normally, it would be something along the lines of he would owe you $x amount.

    If that is the case, simply send him a certified letter (return receipt) stating very clearly what the breach was, what he owes you as a result of the breach, and when payment is expected to be received.

    Keep the letter short and simple - just state the facts, not emotions, etc.

    If that payment due date then passes with no payment or response, take it to small claims court (assuming that you're within the dollar limit). You should win hands down with just your written contract (signed) and the certified letter that you sent to him. No attorneys need to be involved.
  4. John Allin

    John Allin PlowSite.com Addict
    Messages: 1,327

    And, if the letter gets inadvertantly 'forwarded' to the local press - won't that publicity be nice?
  5. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    I would think that you wouldn't want a customer if they don't want you. Let them walk somewhere else for a lower price, they most likely will wind up paying for it in the long run anyways. Tough pill to swallow.
  6. Nebraska

    Nebraska Member
    from Midwest
    Messages: 32

    That's usually been my attitude about it LawnLad. This situation happened right before it was going to snow. We received a call from the owner of a daycare TWO HOURS BEFORE A FORECASTED SNOWFALL saying that service has been great...but.....we found someone cheaper (about $65 per event cheaper; our price was about $210 on a 1-3inch event). I told him about the 30 Day clause in our contract and he said he's not paying for any work done from this point on. If it snows 6 times during this 30 Days we are looking at lost income of about $2-3k...not a ton but a loss non the less.

    JAA---With your VAST experience how do you handle this type of issue?

    Why have a contract then?
    Last edited: Jan 17, 2003
  7. John Allin

    John Allin PlowSite.com Addict
    Messages: 1,327

    Well.... regardless of the amount of the contract - I'd let them go. If they refuse to pay you, and you force the issue, and IF you get to court you'll have difficulty proving "damages". Lost revenue ? Welcome to the world of business. "Failure to live up to the terms of the contract" ?? Small potatoes.... you can't recoup the actual amount you would invoice them - only the net profit you lost (not the gross profit).

    Now, if the judge asks you what your net profit from the revenue lost would be (and lets say it's 5 pushes at $210 per push making the total revenues $1050 less projected direct costs for a gross profit of about $500 - less overhead/depreciation/etc for a net profit of [maybe] $200) and you tell him $200 he might tend to laugh at you and award you $100 total, if he's in a real good mood.

    IF you're in a jurisdiction that requires you be represented by a lawyer (at $100/hr, conservatively) you could end up spending a few hundred dollars to "prove your point". I like to choose my battles - and this isn't one I'd select.

    If it's worth that much to you - go get 'em !!

    But, strictly from a dollars and cents standpoint..... I'd just let it go. It wouldn't be worth my time to go after. And the potential bad publicity (if you're in a small town market area) wouldn't be worth the great feeling of "winning" the privilidge of paying a lawyer. In this case - the lawyer wins.... you don't.

    Now... if it was a million dollar per winter account... I might think differently.

    Just my opinion - but you did ask for it....
    Last edited: Jan 17, 2003
  8. Nebraska

    Nebraska Member
    from Midwest
    Messages: 32

    Thanks for the input.