Sales contract breaches in Illinois

Many Illinois companies enter into sales contracts with buyers as a routine part of doing business. At times, misunderstandings between sellers and buyers give rise to contract disputes, sometimes due to unclear terms and provisions contained within the contract while at other times the disputes arise from a breach of a contract's terms.

A sales contract breach can result in potentially severe consequences for a company. If a company is sued for breaching a contract, it can expect to face significant costs in terms of litigation expenses, potential judgments and time losses. Contracts are legal documents, and as such, they are enforceable in court. Some businesses find it beneficial to include arbitration clauses within their contracts in order to avoid the potential costs associated with litigation. Arbitration clauses can forbid either party from suing the other while mandating they resolve any disputes in arbitration. If the clause provides for binding arbitration, the parties will have to abide by the arbitrator's ruling.

Breaches can be minor, such as delivering goods later than as scheduled, or material. Material breaches are major violations of the contract's terms. Examples include a seller's failing to provide promised goods, providing goods of a significantly lower quality than that promised or providing goods that are different than what was called for in the contract. Buyers can commit material breaches by failing to pay for provided goods.

Not all contract disputes are due to real breaches. Many times, breaches are perceived by a party but may be due instead to unclear performance expectations contained within the governing sales contracts. Businesses preparing to enter into a contract should have an attorney review the draft to make certain that the agreement is legally sound, clear and concise. They may also benefit by including an arbitration clause in the event a dispute arises.

Source: Houston Chronicle, "What Can Happen if You Breach a Sales Contract?", Lee Nichols, December 07, 2014

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