How to Handle a Contract Breach

Document damages, calculate costs, attempt cure, then escalate through legal channels to recover losses from contract breaches.

1. Document the breach immediately. Collect all evidence of the contract violation: missed deadlines, undelivered goods, payment failures, or substandard performance. Screenshot communications, save emails, photograph defective products. Create a timeline with specific dates, amounts, and contract clause references.
2. Calculate your actual damages. Quantify direct losses: unpaid invoices, extra costs to complete work, lost revenue from delays. Add incidental costs: storage fees, expedited shipping, temporary labor. Document opportunity costs if the breach prevented other profitable contracts.
3. Review contract remedies and notice requirements. Check your contract for cure periods, notice requirements, and specified remedies. Most contracts require written notice before termination or legal action. Follow the exact process outlined in your agreement to preserve your rights.
4. Send formal demand for cure. Issue written notice citing specific contract sections, detailing the breach, and demanding compliance within the contract's cure period (typically 10-30 days). State the exact remedy you're seeking and deadline for response. Send via certified mail and email.
5. Mitigate your damages while waiting. Take reasonable steps to minimize losses: find alternative suppliers, hire replacement contractors, or sell goods elsewhere. Courts require damage mitigation, and it protects your cash flow. Track mitigation costs as recoverable damages.
6. Pursue legal remedies if breach continues. File in small claims court for disputes under $5,000-$10,000 (varies by state). Hire commercial litigation counsel for larger claims. Consider arbitration if your contract requires it. Evaluate collection prospects before spending legal fees on judgment-proof parties.