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Business litigation might need to verify that a contract exists

On behalf of Kadish & Associates Law Group posted in Business Litigation on Thursday, July 7, 2016.

When times are good between two Arizona companies, it might seem as though it would be unnecessary to solidify an agreement. However, if one party stops acting in accordance with that agreement, and a resolution has not been found, filing business litigation for breach of contract might be the next step. As part of the proceedings, the court could first need to determine whether the parties had a contract in the first place.

Hewlett-Packard claimed that it had a contract with Oracle,that HP says Oracle later breached. Oracle was providing software for the Itanium-based servers belonging to HP. In 2011, Oracle ceased development on software for the servers. The company claimed that Intel announced that these servers were being discontinued in favor of another product. Therefore, Oracle was shifting its focus to the new processor.

HP filed a lawsuit against the company, and the first task for the court was to determine whether a contract existed between the parties. In 2012, the judge presiding over the case did just that. The second trial was to determine what damages HP suffered due to Oracle’s breach of that contract. Recently, HP was awarded $3 billion. Oracle announced that it would be appealing both rulings.

Arizona companies have the same access to the courts as HP did when filing its business litigation. However, the larger lesson from this litigation is to be sure that a formal contract exists between the parties. That way, both parties understand their rights and responsibilities in their business relationship, which could help avoid expensive and protracted litigation.

Source: NBC News, “Oracle to Pay $3B for Hewlett-Packard Contract Breach“, July 1, 2016

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