As a business owner, you have contracts for everything. Contracts with vendors, contracts with suppliers and contracts with employees (and that's just the start).

Contracts are the basis of effective business transactions and strong business relationships, and that's particularly true when there is a large sum of money involved.

While both parties have the opportunity to review the contract before signing, that doesn't necessarily mean that everything will go as planned in the future. For example, the other party may attempt to break the contract early, which puts you at a disadvantage.

What is a breach of contract?

In basic terms, a breach of contract is when a party in the agreement fails to deliver according to the terms and conditions of the agreement.

Should this happen, the first thing you should do is discuss your concerns with the other party. Remind them of the contract, thus giving them the opportunity to review it and determine what to do next. It's your hope that this alone is enough to get your relationship back on track.

If that doesn't work, there are a few other things you can try:

• Set up a meeting: This gives you the opportunity to discuss the contract, in person or over the phone, with the hope of finding a resolution. The key here is to stick to the facts and keep calm. Tensions may be high, so you need to beware of the approach you're taking. You don't want to do anything to escalate an already volatile situation.
• Consider mediation: If you're unable to work things out on your own, you can always consider mediation as a means of talking through the disagreement. This gives both parties the opportunity to speak their mind. And with the help of a mediator, you may be able to find common ground.

In the event that you're unable to make any progress, it's time to consider your legal rights. You may need to make a breach of contract claim. This is a last resort, but it's often the only way to enforce the contract.

You sign business contracts for a reason. If the other party violates the conditions, take action.