Commercial litigation often revolves around a breach of contract. This could be a contract between two separate business entities, such as a general contractor and a subcontractor or a manufacturer and a parts and material supplier.
In order to show that a contract was actually breached and move forward with a claim, three elements typically need to be demonstrated.
The contract was valid
First and foremost, there needs to be a valid contract between both parties. This is why it is generally best to get all contractual documentation in writing so that there is a clear record of what has been agreed to by both sides. A verbal or handshake contract is far more problematic and difficult to prove.
Performance issues
Next, it has to be shown that there was an issue with the performance by one party or the other. For instance, perhaps the material supplier did not make a delivery on time. On the other side of the equation, maybe the supplier alleges that they did make the delivery and were never paid as required by the contract.
Damages suffered
Finally, the party that upheld their side of the contract and did perform as required suffered damages due to the actions of the other. In other words, there was some legitimate form of financial harm that was caused by the breach.
This is very clear with nonpayment issues, but can get more complex with other issues. If a shipment of supplies is late, for example, it can still cause financial harm because it impacts production for the party that received the supplies.
If you find yourself involved in litigation over a breached contract, it is very important to understand all of the legal options you have at this time.