Breach of Vendor Agreements

Vendor contracts are agreements with other individuals or companies to deliver goods and/or services. These contracts contain the terms and conditions of the agreement such as the nature of the relationship, the contract beginning and termination dates, how to end the contract before the termination date, goals and expectations, payment clause, insurance, indemnification, protection of certain information, and choice of law and dispute resolution. Many vendor agreements have arbitration clauses so that disputes are resolved in this manner in lieu of court.

Breaches or excuses for non-performance by a party occur for a variety of reasons, such as an inability to perform due to unforeseen or superseding circumstances, impracticability, frustration of purpose, failure of conditions, mistake, and others.

A fundamental breach occurs when one party fails to complete a material term of the agreement so that the other party is unable to fulfill its obligations. In such cases, the non-breaching party could simply cancel the contract without any liability to itself. Other remedies that can be pursued include specific performance, rescission, reformation or a claim for damages.

Disputes arise over LOL clauses (limitation of liability) whereby a party wants to limit its liability to direct damages or to a percentage of the revenue paid by a customer to the vendor or supplier and not have to pay consequential damages. However, the LOL clause must be unambiguous or it may be unenforceable. Where consumers are the party to a LOL clause, the corporate entity that included the clause may have done so in an unconscionable environment so that the clause becomes a contract of adhesion where the consumer has no choice but to accept the limited terms. Courts may invalidate such clauses under these circumstances.

Because the majority of vendor agreement disputes are arbitrated, having a skilled Toronto civil litigation lawyer handling your case is essential to a fair and satisfactory resolution.

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