Common Sales Contract Disputes and How to Avoid Them

For small to midsize businesses, few challenges are more disruptive—or costly—than contract disputes. Sales contracts define business relationships, including the payment terms and collection procedures, how to handle product or service issues, and allocate financial and legal risk associated with the sale. When contracts are vague, incomplete, or poorly drafted, they expose businesses to a higher risk of disputes and customer retention issues leading to damaged relationships, delayed projects, disrupted cash flows, and expensive litigation.

At Jimerson Birr, we help businesses across the Southeast navigate contract pitfalls, implement preventative measures, support better customer relations, and strengthen their legal position if disputes arise. This article outlines the most common causes of conflict in sales contracts and offers practical strategies to reduce risk and avoid litigation.

1. Ambiguous or Incomplete Terms

Unclear or contradictory language is one of the most common and avoidable causes of contract disputes. Agreements that fail to clearly define pricing, delivery timelines, service standards, or payment responsibilities often leave too much open to interpretation. When both parties interpret the contract differently, disputes become more likely, leading to lost customers and revenue or costly litigation.  

Recommendation: Ensure the contract includes all applicable terms in precise, unambiguous language. Clarify pricing, payment deadlines, performance metrics, late penalties, and dispute resolution processes. Ensure that liability is properly capped and risk is appropriately assigned between the parties based on the nature of the transaction. Avoid verbal agreements, generic templates, or trying to do it yourself. Instead, work with experienced legal counsel to draft or review your contracts. An upfront investment in legal guidance can prevent major legal expenses later.

2. Disputes Over Payment Obligations

Payment disputes often stem from unclear invoicing procedures or vague terms around late or partial payments. These issues are especially damaging for smaller businesses that rely on consistent cash flow. A lack of clarity around payment obligations can also delay collections and increase enforcement costs.

Recommendation: Include a dedicated payment section that defines due dates, invoicing steps, late fees or interest, and available remedies for non-payment. A well-drafted contract both deters non-compliance and strengthens your position in the event of enforcement through litigation or arbitration.

3. Poorly Defined Scope of Work or Deliverables

When a contract does not clearly define what is being sold or delivered, misunderstandings are likely. In service contracts, vague descriptions can lead to dissatisfaction or scope creep. In product sales, missing specifications can result in defective deliveries or rejected goods.

Recommendation: Specify the goods or services in detail. For services, include milestones, performance standards, and timelines. For goods, provide detailed product specifications, delivery conditions, warranty terms and acceptance and rejection procedures. Defining expectations upfront reduces the chance of disputes later.

4. Breach of Contract

Breach of contract claims may involve missed deadlines, failure to deliver, non-payment, or poor performance. These breaches can be intentional or the result of misunderstanding. Even seemingly minor issues can escalate if the contract does not outline clear expectations and remedies.

Recommendation: Define each party’s responsibilities clearly. Identify what constitutes a breach and include remedies such as cure periods, termination rights, and indemnity provisions. If deadlines are critical, use a “time is of the essence” clause to underscore their importance. Clarity encourages accountability and provides a path for resolving non-performance.

5. Warranties, Disclaimers, and Limitation of Liability

Businesses often overlook the impact of express and implied warranties. Disputes may arise when buyers believe a product was guaranteed to meet certain standards or uses—or if sellers mistakenly believe they have limited liability when they did not. Under Florida’s version of the Uniform Commercial Code (UCC), implied warranties may apply unless properly disclaimed.

Recommendation: Clearly outline any express warranties. If you intend to exclude implied warranties or limit liability, your contract must contain conspicuous and legally enforceable language to that effect. If you are the seller, protect yourself with exclusive remedy, limitation on liability, and caps on the time in which buyers can bring claims. Work with legal counsel to ensure the appropriate disclaimers are included and valid under state law.

6. Failure to Address Unforeseen Events

Many contracts fail to plan for external disruptions such as natural disasters, supply chain failures, or global events like the COVID-19 pandemic. Without a force majeure clause, a party may be held liable even when performance is impossible through no fault of their own.

Recommendation: Include a force majeure clause that defines qualifying events and explains how obligations will be delayed, suspended, or terminated. Also, include notice requirements and expectations for mitigation efforts.

Strategic Clauses to Strengthen Contracts and Minimize Litigation

Beyond core terms, certain contract provisions can significantly reduce litigation risks or provide better outcomes if disputes arise. At Jimerson Birr, we consider the following three provisions essential in commercial contracts:

1. Exclusive Venue (Forum Selection Clause): Without a forum selection clause, a business could be dragged into litigation in a distant or unfavorable jurisdiction. This drives up legal costs, complicates enforcement, and increases operational burdens.

Recommendation: Consider an exclusive forum selection clause requiring that any legal disputes be brought in a specific court—ideally in your home county. This reduces uncertainty, costs and improves your ability to enforce the agreement locally.

Further Reading: Why An Exclusive Venue Provision (Forum Selection Clause) Is Vital For Small Business Contracts In Florida

2. Attorneys’ Fees Clause: In Florida, attorneys’ fees are only recoverable if authorized by contract or statute. Without a provision for fees, it may not be financially viable to pursue enforcement, especially in lower-value disputes.

Recommendation: Include a clause that allows the prevailing party to recover reasonable attorneys’ fees and costs. This can deter frivolous breaches and strengthen your ability to collect damages when needed.

Further Reading: Three Contract Provisions A Small Business Cannot Live Without: Attorneys’ Fees Provisions

3. Interest on Overdue Balances: If not stated in the contract, a creditor may be limited to Florida’s statutory interest rate, which might not adequately compensate for the delay or risk of non-payment. State law allows businesses to charge up to 18% interest annually on commercial debt, provided it is specified in the contract.

Recommendation: Include a clause entitling your business to recover interest on unpaid balances at the maximum rate allowed by law. Make it clear that this rate also applies to any court judgments obtained. Few businesses do this—and fewer still include post-judgment interest language—but it can make a substantial difference in recovering full value.

Further Reading: Three Contract Provisions A Small Business Cannot Live Without: Contractual Provisions

Be Proactive, Not Reactive

Sales contracts are foundational to small and mid-sized business operations. When vague or poorly written, they create risk. Too often, businesses wait until a dispute arises to consult an attorney—by then, it may be too late to avoid damage. Revenue may be lost, reputations harmed, and litigation inevitable.

Proactive legal planning is a cost-effective strategy that pays dividends. The cost of a well-drafted contract more than pays for itself if it prevents one legal dispute or helps a business retain one key customer. 

Need Help Drafting or Reviewing Your Sales Contract?

Whether you are reviewing existing contracts, negotiating new ones, or dealing with a current dispute, our team is ready to assist. We partner with Florida businesses to develop enforceable, practical contracts that support long-term success.

Contact us to schedule a consultation and take the first step toward smarter, stronger agreements.