Companies recognize that mistakes can cost hundreds of thousands or millions of dollars. But what happens when the mistake wasn’t your fault?
These types of business disputes in Boston or elsewhere often require the court system to fix. When companies are battling over breach of warranty, breach of contract or other disputes, an experienced Boston business litigation attorney should be called to put his years of experience to work.
Issues of contract disputes or breaches of agreements can be long-term and expensive forms of litigation. But they become more expensive if the right firm isn’t called into help. Business leaders recognize that litigation is often necessary to protect a company from an agreement that is broken, either intentionally or unintentionally.
A recent case out of Illinois shows that even an indirect violation of a contract can lead to major litigation. In that case, Wilder Corporation of Delaware v. Thompson Drainage and Levee District, Wilder Corp. had a cattle operation in Fulton County, Illinois on 6,600 acres of land. In 2000, the company came to an agreement with the Nature Conservancy to sell the property for $16.35 million. The environmental organization planned to turn the land into a nature preserve.
Language in the agreement required that any trash and toxic or chemical substances be removed from the property by Wilder before the deal was closed. The cattle company guaranteed in its contract that the land wasn’t contaminated.
Fast-forward to 2006: The Nature Conservancy discovered that the land had been contaminated with petroleum. They sued Wilder for breach of warranty and a district court ruled in favor of the organization and ordered Wilder to pay $800,000 in damages.
Wilder claimed it didn’t know the land was contaminated and they say they didn’t cause the problems. They appealed, but lost anyway. That led them to sue a local drainage district that stored petroleum in tanks near the property. Wilder said the district should have to pay the $800,000, but the drainage district won and the case was upheld on appeal.
In turning down the cattle company’s lawsuit, the 7th Circuit Court of Appeal wrote that a “blameless contract breaker…cannot invoke non-contractual indemnity to shift the risk that he assumed in the contract.”
So, even though it’s possible that the drainage district’s storage of petroleum leaked into the cattle company’s land, the court ruled that by guaranteeing that the land was free from toxins, it assumed the responsibility.
The other lesson that can come away from this case for Massachusetts businesses is the importance of a well-worded contract. Boston business lawyers must consider all possibilities when contracts are written for businesses. There mustn’t be any loopholes and recent case law must be applied in order to protect the company.
And when companies plan to buy a property or building, they must do their due diligence. Simply believing that the property or building is free from chemicals, toxins or is correctly constructed isn’t enough. A poor analysis up front can lead to headaches down the road.
A Boston business law firm, The Brown Law Firm, LLC, has offices in Belmont and Boston. For a free and confidential consultation, call Attorney Graeme Brown at 617-489-0817 or contact us through this website.
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