Get It in Writing:
The IT Professional's Guide to Essential Contracts

Chapter 4: What Is a "Breach of Contract?"
Part 2: Dealing with Breach of Contract Lawsuits

As with any lawsuit, you don't actually have to do anything wrong to be sued for breach of contract. And while a frivolous breach of contract suit against your business will likely be dismissed by a judge, you'll still have to go to the trouble of presenting a defense for yourself or risk a default judgment against you.

What does it cost to present a defense for a case that gets dismissed? Between $2,000 and $5,000, according to the U.S. Chamber Institute for Legal Reform. Luckily, you don't have to pay those costs out of pocket. With a Professional Liability Insurance policy in force, your benefits can cover…

  • Legal defense fees.
  • Settlements.
  • Judgments if you're found liable.
  • Other court costs (witness fees, docket fees, etc.).

Most clients require you to have a Professional Liability (also called Errors & Omissions) policy anyway. The hope is that you never have to use it, but you'll be glad you have it on hand if a demand letter comes your way.

Keep in mind that as soon as you catch word of a potential E&O claim, you should notify your insurance provider. For more on that topic, read the blog post, "What Happens if I'm Sued? A Guide to Handling Errors & Omissions Claims."

Read on for more information about how to stay protected in court.

Next: Chapter 5: Making Sure Your Contracts Hold Up in Court

Grab-n-Go Information

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