When a business and a customer execute a sales contract, the customer generally promises to pay a specific amount of money and the business agrees to deliver a service or product. Once the agreement is signed, the document then becomes legally binding.
According to the Uniform Commercial Code, a breach occurs when one of the two parties fails to hold up their end of the agreement. If the customer fails to pay or the business fails to deliver the services or product, that failure is considered a breach. This would include failure to follow through with all guarantees or warranties in connection with those goods or services, whether those devices are implied or explicitly included in writing.
A customer could sue a business based upon a failure to deliver as agreed, which may be considered a breach of contract and could qualify for damages that could be substantial. A business could also sue a customer if that customer fails to pay as agreed. In some cases, the contract could contain a specific amount of stipulated damages in the case of a breach, and incidental damages could serve as reimbursement of any expenses incurred by either party.
When breaches occur and are disputed, a court battle could be avoided by putting an arbitration clause in the agreement. Such a clause would force both parties to enter into arbitration rather than a lawsuit.
Having an attorney prepare the agreement could help avoid a contract dispute at a later date. A business attorney who regularly handles contracts could help by reviewing an agreement that has already been written and offer legal suggestions for protecting a client’s interests.
Source: Houston Chronicle, “What Can Happen if You Breach a Sales Contract?“, Lee Nichols, December 07, 2014