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Breach of contract alleged by company in business litigation

Arizona companies enter into contracts with other companies to provide goods or services on a regular basis in exchange for a certain amount of money per item. When the goods are delivered, payment is expected in due course according to the contractual arrangement between the parties. When either party fails to fulfill their obligations under the contract, business litigation may be filed for breach of contract.

For example, Independent Warehouse Inc. distributes safety supplies. In 2014, a company that sells safety supplies informed IWI that it needed several trailer stands requested by its clients. IWI shipped the trailers and awaited payment. However, the other company failed to fulfill its part of the purchase contract by not paying as agreed.

When IWI demanded payment in accordance with the contract between the parties, the Pennsylvania-based company claimed that it was awaiting payment from its clients before paying IWI. Sometime later, on Oct. 22, the Ontario safety supply distributor filed a lawsuit for breach of contract in U.S. District Court for the Western District of Pennsylvania. IWI is seeking approximately $400,000 it believes it is owed under the contract, along with other damages.

As is the case with contracts between most Arizona companies, payment under the contract to supply goods or services was most likely not contingent upon the other parties receiving payment from its clients. The other party is obligated to fulfill its part of the contract regardless. Failure to pay as agreed would be considered a breach of the parties' agreement. If the other party refuses to pay when demand is made, business litigation could be the next step.

Source: pennrecord.com, "Independent Warehouse Inc. sues companies alleging breach of contract after withholding payments", Carrie Bradon, Dec. 10, 2015

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