Surprising Ways a Vendor Breach of Contract Can Cost Money
Breach of contract can cause issues for your business in a wide variety of ways, especially if a vendor is the one who fails to uphold an agreement. People may understand that if a vendor fails to fulfill their contract, they might have to pay more for supplies elsewhere. What they may not consider are all of the secondary or hidden expenses often associated with a breach of contract.
The issue isn’t just about a company that your business has grown to rely on failing to uphold their obligations to you. It is also about the impact of that decision on your business. Taking action may be necessary to recoup your losses and to remind other vendors that they must comply with the contracts they sign.
You may have to spend significant time researching and negotiating
As the manager or owner of a business, issues with supplies and materials will become your responsibility. Time that would have been better spent helping grow your business can wind up wasted on reviewing vendor pricing, requesting quotes and negotiating with various businesses when a breach of contract requires an immediate and outside solution.
New vendors or workarounds can mean logistical costs
Arranging for shipping, storage and other needs related to a new vendor or an emergency purchase can consume many hours of employee work. The more difficult it is to secure fast replacement supplies, the more money those efforts will potentially cost your company.
Breach of contract could mean lost staffing costs or material waste
Depending on the structure and scale of your business, not having a specific material or item could cause a massive disruption to the usual flow of operations.
For example, if the components that a vendor failed to deliver are necessary to produce a product, staff working with that component may have hours of wasted work time. While you may be able to find cleaning or other busy work for them to do, not receiving supplies in a timely manner can mean unnecessary and extended overhead expenses.
Additionally, if the products or materials are time-sensitive or if you use natural ingredients, spoilage of other components and loss of materials is also a possibility that could cost your company significant money.
A material breach of contract regarding a failure to deliver necessary goods and products can cause noteworthy financial impacts for your business. While a breach may have changed your mind about a supplier, meaning you no longer want to do business with them, you may still be able to take them to court to get your money back or possibly seek damages for the impact of their failure to uphold their side of an agreement.