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If someone else breaks a contract, do you have any obligations?

You and a supposed business partner sign a contract. Your companies agree to work with one another. Perhaps you're buying parts for a specific product that you make and sell, and the other company is the supplier. You agree to pay X amount for monthly shipments of the parts that you need.

Then the other person breaks the contract. The shipment does not come in on time. When asked, they tell you that they got a more valuable offer from a competitor, so they sold the parts and materials to them, and they'll be a week late getting yours to you.

Obviously, this breaches the terms of the contract that you both signed, which includes a specified date for shipments to come in. It sets back your production and costs you money. Do you still have to honor the contract and pay for the shipment the following week, or can you look for a new supplier?

You do not have to honor the contract. The breach against you already invalidated it and you can move on without any ramifications. The other party cannot hold you to the terms or demand payment.

After all, you did not just agree to pay for those parts and materials. You agreed to pay for them on that specific date. When they missed that date, they did not give you what you were paying for, and so there's no obligation to pay for something you never agreed to in the first place.

Disputes over contract terms can often grow contentious. Make sure you know where you stand and how to defend yourself and your company.

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Law Office of Alexander Alvarez
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