“Preferred Treatment” Based Breach Of Contract Claims
Breach of contract claims can cover a variety of activities, including claims from one party that another party is prioritizing business from other companies under an existing contract.
If, for example, two companies enter into an agreement, whereby one is providing a certain supply of a product each month, but fails to meet that expectation, the other party who is relying on the contract has a potential breach claim.
This also covers practices that involve one company breaching its contract terms in order to prioritize, or provide “preferred treatment,” to other customers. Companies will sometimes do this, for example, if they want to impress new customers who have never done business with them before (over, for example, a customer, company, or other entity that it deems to be a secure business partner).
Signs of a Non Performing Party
There are a number of actions that can signal that another party may no longer be prioritizing its existing contract obligations; For example, when:
- Priorities are placed on lowering operating ratios and satisfying shareholders at the cost of customers
- Workforce numbers and employees are cut back to the bare bones to reduce costs
- There are noticeable serious deteriorations in service because the obligating party does not have the capacity to meet contract expectations
- There is a noticeable increase in service for some customers, while there is a reduction in service for others
- The company failing to perform on existing contracts is, simultaneously, entering into new contracts, thus jeopardizing its ability to meet its existing contractual obligations
A Ripple Effect
In many cases, the breach of one contract then affects a number of other contracts for that business, as it can no longer meet its commitments to other companies it has entered into business with. This is often the case for companies that deal in international exports and purchasers. When this happens, the company that was relying on the other company to follow through sometimes has to declare force majeure under its other sales contracts, and can lose significant profits as a result. In this case, it may make sense for them to bring a breach of contract claim against the breaching party for damages.
Columbus, Ohio Breach of Contract Attorneys
If you are concerned about a potential breach of contract dispute here in Columbus, Ohio, contact our Columbus breach of contract attorneys at the Kohl & Cook Law Firm LLC to learn more about your options. It is important to note that, in some areas of business, parties will sometimes first be required to go through specific mediation channels – such as filing complaints with boards governing that particular business area – to work out any dispute before they can sue in court. Therefore, speaking with an attorney as soon as possible is advisable.