So, you’re a business owner and you have a contract with a large company. You recently had an issue with how Goliath performed their obligations under the contract—perhaps because Goliath hasn’t paid, or maybe Goliath made unreasonable requests outside the scope of the contract. In this David versus Goliath scenario, you (i.e., David) may feel intimidated by the size, experience, or sophistication of a large company (i.e., Goliath). Regardless of the size disparity, a contract with a Goliath is still a contract. Goliath can’t just ignore the contract and its corresponding obligations. Here are a few things to consider if you find yourself in a contract dispute with a large company:
The Contract Language Rules
The first thing to look at is the language of the contract. The contract’s language governs the relationship between your two companies—these are the rules by which you both must abide. The contract’s language creates obligations to which both parties must adhere. If Goliath departs from the contract terms, you may have a claim for breach of contract for any damages caused by Goliath’s breach. Be wary, however. If you allow the breach to continue and you continue to perform your obligations under the contract—there could be consequences. A court may view your behavior as you acquiescing to the breach and amending the contract to allow Goliath’s breach.
Is It a Material Breach?
Consider the scope or importance of Goliath’s breach. For example, if Goliath emails invoices to a different email than the one in the contract, perhaps it's not a material breach (although it may be). Whether something constitutes a material breach is often a question of fact for the Court to resolve. At a minimum, though, a material breach must damage you in some way—either directly or indirectly.
Consider Your Damages
Even if Goliath breaches the contract, consider how much you’re damaged. Litigation can be expensive, especially going against an entity with a much larger war chest. Sit down and work through how much Goliath’s breach is costing you each month or year. This will help you decide if it is worth contacting a lawyer to go after Goliath. If the amount is minimal, then consider talking to the breaching party to see if the issue was just an honest mistake.
Document, Document, Document
If you’re going to sue a larger company, having a consistent paper trail is very helpful. Keep your emails, texts, and all other documents that help show Goliath’s breach. These documents can help lower the cost of litigation. In some instances, keeping good records can prevent litigation from being filed. Some companies may respond positively when presented with good documentation of their breach. Even if litigation wasn’t prevented by confronting the company with good documentation, it can help lead to an early settlement once the breaching party’s lawyer explains the dire situation the breaching party it in.
Come Up with a Cost-Effective Plan
Oftentimes, calling the breaching party and yelling at them doesn’t result in a settlement. Instead, work with an attorney to create a cost-effective strategy to recover your damages from Goliath. Perhaps that means starting with a demand letter, or even just consulting on the strategy or approach you should take to help get the best results from pre-litigation discussions. If that hasn’t worked (or you’ve spent several months negotiating with Goliath but haven’t gotten anywhere), a lawsuit is likely your only means of recovery. No matter the situation, make sure you hire a lawyer you trust and create a strategy that accounts for what may be a long fight against a bigger, more well-funded, company.