Contract breaches are common in the business world. Yet not all contract breaches need to cause a problem, let alone end in litigation.
Life is not predictable. Things can happen that make it impossible to fulfill the commitment you are contracted to. While some things occur out of the blue, often you can see the problem coming. Being honest with your client about the situation can save you both a lot of stress.
Warning a client before you breach a contract allows them to plan
Imagine you run a dress-making business. Your material supplier has promised delivery of a new batch of silk next Thursday. You need the material to add the finishing touches to a wedding dress needed for that Saturday.
If your supplier fails to warn you, and they do not deliver, you will be unable to finish the dress in time and have an angry customer to answer to. The bride may bring a breach of contract lawsuit against you for ruining her wedding day. You may need to bring a breach of contract against the material supplier.
If the supplier tells you now that they are unlikely to make the deadline, you can make alternative arrangements. You can source the silk from elsewhere, or tell the bride you need to use a different material. It allows you to fulfill your obligation to your client and allows her to enjoy her wedding day. As for your honest supplier, it allows them to keep your business and your trust.
When writing business contracts, you may want to stipulate periods of warning a party unable to fulfill the contract must give. You could also set out the penalties if this does not happen. The clearer your contract, the clearer your business relationships will be.