When a business backs out of a transaction, it can disrupt your operations and lead to financial losses. In Maryland, legal options exist to address this issue based on the circumstances and the terms of the agreement.
Understanding these options can help a business take appropriate steps to recover losses or enforce the agreement.
Review the contract
The first step involves examining the contract terms. A well-drafted contract often includes specific obligations, deadlines and consequences for non-performance. If the other business failed to meet these terms, it could constitute a breach of contract. Maryland law allows businesses to pursue remedies such as compensatory damages, which cover financial losses caused by the breach.
Determine the nature of the breach
Maryland law recognizes two types of breaches: material and minor. A material breach occurs when the failure significantly impacts the agreement’s purpose, allowing the harmed party to seek immediate legal remedies. A minor breach involves smaller issues that do not disrupt the overall deal. In these cases, damages might still be recoverable, but the contract itself may remain enforceable.
Explore negotiation and mediation
Before pursuing litigation, businesses often attempt to resolve disputes through negotiation or mediation. These methods can save time and money while preserving business relationships. Mediation involves a neutral third party helping both sides reach a mutually acceptable solution.
Consider legal action
If negotiation fails, filing a lawsuit might become necessary. Maryland courts evaluate breach of contract claims based on evidence such as the agreement terms, proof of performance and the financial impact of the breach. Courts may award damages to compensate for lost profits, cover additional costs or address other consequences caused by the breach.
To avoid future disputes, businesses should draft clear contracts that outline all terms and expectations. Including provisions for dispute resolution and consequences for non-compliance can provide additional protection. When another party backs out of a transaction, taking timely action ensures the best chance to recover losses or enforce the agreement under Maryland law.