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Legal contracts are a fundamental part of doing business. With a good written contract that carefully and clearly sets out the terms and requirements of a transaction, costly liabilities and pitfalls can be avoided. When a party to a contract violates, intentionally or not, the agreed-upon terms, then an experienced legal team can seek a cost-efficient, out-of-court resolution or litigate if necessary.

Palo Alto-based Hewlett-Packard Co. recently settled a contract dispute with the United States Postal Service. The USPS claimed that from October 2001 through December 2010, HP violated the pricing terms of a contract, which required HP's pricing for the USPS to be no higher than pricing for customers with similar contracts. The USPS also accused HP of misrepresenting prices when the contract was being negotiated.

To settle the dispute, HP, which admitted no liability, will pay $32.5 million. The Justice Department also issued a statement saying that the claims made by the USPS are only allegations and do not determine liability. A spokesperson for HP characterized the settlement as a "mutually acceptable resolution," adding that the company "values its ongoing relationship" with the Postal Service.

Incidentally, the USPS continues to report quarterly net losses, including the May report of a loss of $1.9 billion. That brings the agency's total liabilities to $64 billion, with assets of $22 billion.

Legal knowledge and skill are required to ensure that contracts are enforceable and can withstand scrutiny. A single oversight can jeopardize the future of a business, so it is extremely important to draft legal documents that protect your interests at the inception of the company and throughout its growth.

You can learn more about these matters at our business and commercial law overview.

Source: Reuters, "Hewlett-Packard to pay $32.5 million to settle USPS pricing case," Aruna Viswanatha, Aug. 1, 2014

Source: Independent Record, "HP to pay $32.5M to settle Postal Service dispute," Aug. 1, 2014

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