Free Enterprise - The FindLaw Small Business Law Blog

Can Your Small Biz Sue for Losing Biz?

We all know that it's a free market, for the most part, and small business owners are willing to compete for customers and clients. Entrepreneurs often have faith that their product or service will be preferred, or at least they're willing to win some and lose some, without too much complaint, as long as they believe the playing field is level.

What about when circumstances that are out of your control, an "act of god" for example, cause you to lose business? Can you sue?

A Clean Break

The question arises out of Miami, where the competition for clearing out debris in the wake of Hurricanes Harvey, Irma, and Maria was fierce. One of the cleanup companies, Ashbritt Environmental, had a trash-hauling contract with the city of North Miami Beach. The city cancelled that contract in late September, handing over cleanup duties to DRC Emergency Services. Ashbritt sued, claiming the storms, and several other factors, kept it from adequately performing its contractual duties:

"Ashbritt's ability to perform its duties to the city were substantially interfered with and impeded as the necessary trucks and equipment flowed to those willing to pay much higher prices for quicker clean-up ... Ashbritt was unable to perform to the satisfaction of the city through no fault of its own, and its performance should be excused for impossibility of performance or force majeure event."

Hurricane Force

Force majeure refers to an event or effect that cannot be reasonably anticipated or controlled, like a war, labor strike, or extreme weather. Also referred to as an "act of god," these kinds of events can often be used as a defense to a claim that one party failed to fulfill its duties under the contract. Ashbritt is contending that the hurricanes, along with competition for contractors and subcontractors, made it difficult to find trucks to perform its own services.

City Manager Ana Garcia disagreed, telling the Miami Herald, "every opportunity was given to them to cure its default." And City Attorney Jose Smith called the lawsuit "totally devoid of legal basis. It's not a defense to walk away from a contract because it's going to cost you more money."

North Miami Beach's new contract with DRC will ultimately cost it an extra $11 per cubic yard of trash, about 2.5 times as much as what Ashbritt was charging. And the city is expecting the latter to repay the difference. So before you sue for a customer taking their business elsewhere, you'll want to be sure your small business was meeting its contractual obligations. And contact an experienced contracts attorney near you.

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