A contract is a promise or an agreement between two or more parties that is legally binding. A contract does not have to be a written document.
A contract can be a verbal contract, whereby two individuals agreed to a specific thing or it can be ‘implied’. An implied contract is one where two or more parties mutually consent to an agreement without having a written contract or an agreement, in person, that has been expressed in words.
What is a breach of contract?
A breach can be of a verbal, written, express or an implied term of a contract. A breach can occur:
- If a party refuses to perform their duties set out in the contract
- If the work carried out is defective
- Failure to pay for goods or services provided by the party
- Failure to deliver goods or services
- Being late with services without a reasonable excuse
There are normally four categories which a breach of contract would fall under. There are minor, material, fundamental (repudiatory), and anticipatory.
A minor breach
A minor breach occurs when a party to the contract fails to perform, or abide by, a minor part of a contract. In such a breach, the failure is so small or so nonessential that all parties can otherwise fulfil any remaining contractual obligations.
A material breach
A material breach occurs when there has been a fundamental breakdown in the agreement because the breaching party fails to fulfil a critical and important part of the contract or creates a situation which makes it impossible for the contract to be completed.
A fundamental breach
A fundamental or repudiatory breach of contract is where the breach is so severe that the contract can be terminated due to the critical nature of the breach. The breaching party would have to break an essential part of the agreement making it difficult for the party to complete their own responsibilities in the contract.
An anticipatory breach
This type of breach is one where a party expressly and openly communicates that they will not be carrying out a term or condition of the contract between the parties involved.
What are the remedies for a breach of contract?
Repudiation
If a condition of your contract has been breached, you may be able to terminate the contract by ‘repudiation’ and claim compensation for the loss you have suffered. If the breach of contract is a breach of a warranty, compensation is by damages alone.
Damages
Damages are used to put the claimant back in the position they would have been if the terms of the contract had been met as agreed.
You will be entitled to ‘liquidated damages’ if the contract specifies that an amount should be paid if the other party breaks the contract.
Specific performance
Obtain a court order for the other side to carry out their legal obligations.
How to prove a breach of contract?
- The existence of a contract;
- Prove that the other party failed to perform their obligations under the contract satisfactorily; and
- Prove that you suffered a loss.
Before launching into a claim for breach of contract it is important to evaluate the merits of your claim. Consider the following:
- Is my claim worth pursuing?
- Is my claim reasonable and cost-effective for me?
- The relationship between the contracting parties;
- Will pursuing this claim damage the reputation of my business?
Having considered the above, you may wish to explore alternative methods of negotiation before resorting to legal proceedings for a breach of contract.
Going down the litigation route is not always the best route, it can often be expensive, time consuming and stressful.
It is also worth bearing in mind that you have six years to bring a claim.
How can Carter Bond Solicitors help?
We have a dedicated dispute resolution team who specialise in commercial contract claims.
If you are considering taking action due to a breach of contract or whether you would like further advice about enforcing your contractual rights, please contact us on 020 34756751 and we will be happy to assist you.
