What Are Common Contract

Disputes?
Seen by many as “the cost of doing business,” contract disputes are
commonplace in virtually all business sectors nationwide. When most
agreements are drafted and signed, all signatures bind the parties
together for a predetermined period of time. But far too often, one party
may deviate from the terms set forth in the agreement, and cause a
breach of contract.
Let’s look at seven of today’s most common contract disputes. Most of
these contract dispute examples involve well-known agreements signed
hundreds of times daily.
1. Commercial Leases
The first of our examples of contract disputes in commercial leases.
Language in commercial lease contracts, or the lack thereof, causes
numerous disputes between business owners renting space, and building
owners wanting their rent paid every month. A common component
often disputed is called an unlawful detainer, which is an eviction action
that demands up to twelve months of rent payable immediately prior to
the lessee’s exit. The lessor may have not specified the exact amount
payable upon breach, but demands the full amount anyway. In some
cases, the lessee simply didn’t follow contract terms or didn’t understand
them.
 2. Non-Compete Agreements
The second of our contract disputes examples is non-compete
agreements. Some businesses want their employees to sign non-compete
agreements which activate immediately when they begin work. These
contracts dictate that once an employee severs their work relationship
with an employer, they cannot work for the employer’s competitor for
an “x” number of years. There are some agreements where employees
can’t work in the same field at all for a predetermined amount of time.
Non-compete agreement disputes are contentious at best.
3. Sale of Goods Contracts
Governed by the Uniform Commercial Code, the loosest contracts you’ll
find are those involving the sale of goods between merchant and
supplier. As such, these open-ended contracts are heavily disputed in
wholesale and liquidated merchandise transactions, to name a few. In
fact, some contracts put before buyers won’t always guarantee
performance or that customers will receive the products they purchased.
Products significantly not as described (SNAD) or those that never
arrived are easily litigated if the contract guarantees the product the
buyer is to receive.
4. Non-Disclosure Agreements
(NDAs)
There are many reasons one would request another to sign an NDA.
Sometimes, an intended buyer or investor will be bestowed with
sensitive information that, if leaked, could ruin the seller or business
model. Other times, an individual wishes to receive quotes for work on
something top-secret, cutting-edge or patent pending. You’ll find these
agreements are disputed when the signee is accused of leaking
information (or actually does).
While these are rather common, a mountain of evidence may be
necessary to prove the individual accused of breaching the NDA actually
did so knowingly and willingly.
5. Consumer Contract Disputes
Businesses enter a legally binding contract when they sell that $400
game console, with proof in that little piece of paper sitting at the bottom
of the carton called a warranty.
Manufacturers promise consumers that, in exchange for cash, they’ll
receive a product that’s free of defect and hazard. They promise that if
the item isn’t as described, you can return the product for a full refund
(unless it gets damaged by the consumer). By failing to honor that
warranty, or by selling products that injure or hurt the consumer, the
manufacturer has breached consumer trust and rendered their warranty
useless. This type of contract dispute is far more common than others in
contract law – yet it never requires a single signature.
6. Company Contracts
Today’s interconnected world relies on contracts between various
businesses around the globe to operate efficiently. Your website
hosting? That’s a company contract. Just took on several new clients for
your writing company? There was probably a contract drafted for that.
Everywhere you look, businesses are contractually involved with
another proprietor in some manner.
When one party breaches the agreement, and calculable losses start
mounting, they may be civilly liable for those damages provided the
language in the contract was clear. For example, if you’re promising to
lease 100 GB of cloud space to another business each month, but only
provide 50 GB, you’ve breached a company contract.
7. General Material Breach
By definition, material breaches are the outright refusal to follow the
terms set within the contract – literally all of them. It calls to question
whether the contract should’ve been formed to begin with, let alone
signed.
The damages caused by material breaches could amass millions or more.
These are serious, and should be treated as mission critical if you’re
accused of causing irreparable differences so grave the contract is
thematically useless.
8. Honorable Mention: Tortious
Interference
The most interesting type of contractual disagreement isn’t a contract at
all, but falls under contract law. When two parties have a written
obligation to each other, and an outside party attempts to damage that
relationship by interfering with one or all components of the contract, a
tort claim can be made by either or both parties damaged by the
interference.
One example would be if the NBA had a contractual obligation to a
major athletic clothing line, but the NFL decided to “entice” the clothier
away by making outlandish offers or promises. In this scenario, the NFL
committed tortious interference and would be liable for damages the
NBA suffered.
Avoiding Contract Disputes
Language is as important to contracts as the people who will be bound
by their terms. Properly written contracts with language each party can
clearly understand could stop many contract disputes before they start.
Of course, one cannot predict where and when another party will breach
the contract, but with clear and concise wording, any sensible party
would be hard-pressed to blatantly deviate from the terms set forth.
Due diligence is another key component of successful contracts. Simply
put, do your homework and choose wisely who you adjoin signatures
with on paper.
If you’ve done your part and another party breached their end of any
contract you signed with them, Smith Kendall, PLLC offers assistance
with TROs, pre-litigation and other forms of contract defense.