Dinn, Hochman & Potter, LLC

Breach of contract dispute goes before jury

At some point in time, it may be necessary for an Ohio business to hire another company to perform tasks for the business. In some cases, this may be a short-term assignment that is handled by a simple phone call and payment for work completed. In other cases, it may be a more involved assignment, and the companies enter into a contract stating what will be done and how much will be paid for the services rendered. When this happens, it is assumed that both parties will live up to the terms of the contract; otherwise, they risk a breach of contract dispute.

In 2009, a grocery store chain hired another company to work on reducing its tax obligation. The contract indicated that the company would receive 25 percent compensation for tax savings it was able to secure. In 2012, the grocery store chain was informed that it owed $4.6 million in taxes. After review by a state auditor, this number was adjusted to $2.15 million. Later, state officials reviewing the matter discovered a mathematical error which further reduced the amount owed to a little over $1 million.

The company hired to work on reducing the tax bill claimed that the grocery store chain owed them $1.37 million as a result of the tax savings. The grocery store chain disputed the bill, stating that the company was not the one who discovered the errors. The matter went before a jury and the amount owed to the company was reduced to approximately $350,000.

Ohio businesses often enter into contracts in an effort to specifically state the expected services to be provided and identify exactly how and what payment will be rendered. By working with a carefully constructed contract, the likelihood of a breach of contract is minimized. Experienced legal counsel can assist by writing and reviewing such contracts.

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Cleveland, OH 44124

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