A breach of contract is a violation of one or more of the contractual terms and conditions of a contract. The breach could be as minor as a late payment or as severe as the failure to deliver a promised asset.
A contract is legally binding and will hold up in court. If a breach of contract can be proven, the standard remedy is to provide the victim with what was initially promised. In this article, Breach Of Contract For Services, we take a look at the process and mechanism involved.
Please click here to find out more about our Commercial Litigation services.
Free Initial Telephone Discussion
For a free initial discussion with a member of our new enquiries team, get in touch with us today. We are experienced in dealing with all aspects of Commercial Litigation and once instructed we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.
What are the different types of breach of contract?
- Minor breach of a contract – where a term(s) has been breached, but the breach is so inconsequential that the remainder of the contract can be performed (the injured party can sue for damages, but typically cannot terminate the contract).
- Material breach where multiple breaches have occurred, or the breach reaches the core of the contract, rendering it impossible to perform the contract.
- Anticipatory breach where one party notifies the other of their inability to perform part or all of their contractual obligations. In these instances, the contract can be terminated, and damages can be sought.
- A Fundamental breach of contract, also known as an actual breach, is one that renders the contract invalid or unenforceable. Generally, breach of contract occurs when one party does not fulfil their contractual obligations. Typically, the breach is severe enough to warrant termination of the contract.
If a breach of contract is established, you must still provide evidence that the other party’s failure to perform caused you harm and that the harm was not too remote from the breach.
Does the contract have to be in writing?
In order for a “contract” to be breached, it need not be a written document. A breach of contract may involve a verbal, written (express), or ‘implied’ term. A breach can occur:
- If a party refuses to perform the obligations specified in the contract, the other party may terminate the agreement.
- If the work being carried out has defects.
- Due to failing to pay for a service or failing to pay within the specified time frame.
- Resulting from a failure to provide products or services.
- As a result of products that do not match the agreed-upon description.
- From being late for services without a valid reason.
How do you prove breach of contract?
To file a claim for breach of contract, you must demonstrate:
- that there was a valid contract – It must be demonstrated that a legally binding contract existed and that it had been breached.
- that the other party did not fulfil their obligations under the contract – The contract’s terms and conditions must be clarified and contrasted to what actually transpired.
- that you suffered a loss as a result – The innocent party must demonstrate that it has suffered a loss as a result of the breach, and that this loss warrants compensation.
You will also be expected to have taken reasonable measures to ‘mitigate your losses’ in order to lessen the impact of the breach of contract. This is referred to as the “duty to mitigate,” and losses cannot be recovered if they could have been avoided with reasonable effort.
What are the main remedies for breach of contract?
- Termination of the contract
Termination for breach of contract is when one party decides to terminate the contract. Termination is available in the following situations:
- As a result of a mistake
- Misrepresentation
- Duress
- Undue influence
- Breach of fiduciary duty
The result of terminating a contract is that it is null and void. For termination to function as a remedy for breach of contract, it must be possible to return the parties to their position prior to the contract.
- Injunction
Depending on the severity of a breach of contract, a variety of remedies may become available.
Damages are calculated based on monetary loss. It is not always sufficient or ‘adequate’ to compensate the innocent party for a breach of contract.
Injunctions are then used to prevent further breaches of contract.
However, injunctions are not available when the innocent party terminates the contract for repudiatory breach, as termination results in the termination of the contract. Therefore, if a breach of contract has occurred but the agreement has not been terminated, the innocent party may choose to continue the agreement. For example, the breach may result in:
- the innocent party to be in breach of other contracts,
- financial loss that cannot be easily quantified in damages, or
- other significant ongoing harm to the business, such as ongoing breaches of restrictive covenants.
This “inadequacy of damages” gives the court the authority to grant injunctions and specific performance.
- Specific Performance
Specific performance is a type of injunction requiring compliance.
The majority of contractual obligations necessitate action, as opposed to refraining from action.
Specific performance necessitates the execution of court-ordered actions. These actions will likely be in accordance with the provisions of the contract or designed to facilitate contract fulfilment.
Like all injunctions, specific performance is a “discretionary” remedy. They do not exist by default, such as compensation rights.
To have a reasonable chance of obtaining specific performance, the defendant must convince the judge to exercise his or her discretion in his or her favour.
The remedy of specific performance will not be granted if these conditions are not met, but the innocent party may still recover damages for the breach.
- Damages
If a commercial contract is breached, you have the right to seek monetary compensation. You are entitled to compensation that restores you to the position you would have been in if the breaching party had not breached the contract. This includes the cost of hiring a third party to complete the contract as well as any lost profits resulting from the breach.
Contract violation damages are notoriously difficult to calculate. The claimant bears the primary responsibility for proving their losses. This requires identifying the cause of the loss and determining whether adequate efforts were made to mitigate it.
How we can help
We have a proven track-record of helping clients with commercial litigation. We are a multidisciplinary firm and have all the expertise inhouse to satisfy the most exacting requirements of our clients. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact Our Commercial Litigation Solicitors
It is important for you to be well informed about the issues and possible implications of a breach of contract for services. However, expert legal support is crucial in terms of ensuring a positive outcome to your agreement.
To speak to a member of our New Enquiries Team today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
Comments are closed.
