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Home Q&A Forum Penalty for breaking a business contract?

Business Contracts

Business Contract


Asked on Sep 21, 2023

Penalty for breaking a business contract?

I am a small business owner looking to enter into a contract with a larger company. We have negotiated terms and conditions, but I am concerned about the potential penalty if either party breaks the contract. I would like to know what the legal consequences may be for a breach of contract, so I can make an informed decision about entering into the agreement.

1 Attorney answer


Business Contracts


Answered 298 days ago

Merry A.

ContractsCounsel verified

Business Lawyer
Licensed in Washington
Free Consultation

Some contracts incorporate both reasons for breaching or ending a contract, and some incorporate the amount of a penalty. Most business contracts incorporate what state's laws apply, and whether a dispute will be taken to arbitration or court. If nothing is specified in a contract, parties are most likely to sue for lost income. To truly make an informed decision, I recommend that you consult with a business attorney BEFORE you sign a contract, so that he or she can review the proposed contract and recommend changes BEFORE you sign.

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