Alabama has a reputation as a business-friendly state, and one of the ways that it has earned that reputation is by setting out a straightforward process by which parties to business contracts can resolve disputes that arise from those contracts. As long as you are not agreeing to do something illegal, the law gives employers, business partners, buyers, and sellers a lot of flexibility in concluding agreements to engage in commercial projects and transactions together. Even if both parties entered into the contractual agreement in good faith, sometimes it is not possible for one of them to meet their contractual obligations, causing them to be in breach of contract. Sometimes it is possible to resolve breach of contract disputes without resorting to litigation, and the better your original contract, the easier it is to prevent a breach, since both parties go into the agreement with realistic expectations. The Alabama business contract lawyers at HKM Employment Attorneys LLP can help you draft airtight business contracts and protect your rights if the other party breaches the contract.
What Counts as a Breach of Contract?
When two parties, be they individuals or businesses, sign a contract, the obligations that they agree to take on are legally binding. This means that, if you do not do what you promised to do by signing a contract (for example, paying a building contractor according to an agreed upon schedule or continuing to work for your employer for two years), the other party can take legal action against you in civil court. Breach of contract is the legal term for breaking the terms of a contract.
Because there is so much flexibility about the terms to which parties can agree in a business contract, there is also a lot of variation regarding the ways they can violate those terms. The following are some common causes of breach of contract disputes:
- An employer failing to pay an employee the amount specified in the employment contract (such as what happened in the well-publicized dispute between Vince Lennon and the Alabama News Network or between Darryl Crompton and Tuskegee University)
- A vendor failing to deliver a product according to the agreed upon timetable
- An employee or other party disclosing confidential proprietary information
- A partner in a startup using the capital provided by the other partners in a way other than what the parties specified in the contract (such as what happened with the Opelika outlet mall project in the 1980s)
- An employee setting up a competing business shortly after ceasing to work for an employer (such as in the dispute between Helen Keller Hospital and its former employee Dr. Stephen Keith)
The best employment contracts lay out provisions for repairing breaches of contract, penalties for ending the contractual relationship earlier than agreed upon (the business contract equivalent of early termination fees), and arbitrating or litigating disputes arising from the contract.
How to File a Breach of Contract Lawsuit in Alabama
Most business contracts contain language about how to resolve disputes related to the contract. If yours does not, you should contact an Alabama business law attorney even before attempting to resolve matters by discussing matters with the other party. In any case, you should notify the other party immediately when you discover the breach of contract. The statute of limitations for breach of contract lawsuits in Alabama is six years. Therefore, it is important to notify the other party of when you became aware of the breach; this way, there will be no room for disagreement about when the breach occurred.
If you bring your breach of contract dispute before a judge, the judge must first decide whether the contract is enforceable. Alabama case law includes court decisions where judges have decided not to enforce non-compete agreements on the grounds that these agreements unfairly restrict the employee’s freedom to seek new employment after an employment contract ends. For this reason, you should consult an Alabama employment lawyer before you sign a non-compete agreement.
If you are the party that cannot meet the obligations to which you agreed in the contract, do not panic. The business law attorneys at HKM Employment Attorneys LLP can help you amend your contract so that its terms are more feasible. It is usually in both parties’ interest to amend the contract; no one wins when a business agreement falls apart.
When a Major Disaster Was the Reason for the Breach of Contract
In 2020, the COVID-19 pandemic threw everyone’s plans into disarray, in Alabama and almost everywhere else. People who were able to abide by the terms of business contracts they signed in 2019 and earlier were the exception, rather than the rule. Does that mean that the Alabama courts had their schedules packed with hearings about breach of contract lawsuits? Not necessarily. Part of the reason is that the parties amended their contracts outside of court with the help of business law attorneys. The other part of the reason is contained in the text of the contracts themselves.
The best business contracts contain force majeure clauses. These clauses state that if a “force majeure event” is the reason that one or both parties cannot fulfill their contractual obligations, it is not considered a breach of contract. A force majeure event is a majorly disruptive event outside the control of the parties. Examples of force majeure events include hurricanes and other natural disasters, wars, and pandemics.
Contact an Alabama Breach of Contract Lawyer
Breach of contract disputes can be acrimonious and costly, but they do not have to be. You can emerge from a breach of contract dispute in the strongest possible financial position, whether it means resolving matters amicably with the other party to the contract or having a court issue a judgment in your favor and award you damages. The first step to resolving a breach of contract dispute is to contact an Alabama business law attorney. Contact the Alabama breach of contract lawyers at HKM Employment Attorneys LLP to set up a consultation.