Remedies for Breach of Contract: An Overview

Remedies for Breach of Contract

What is a breach of contract?

A breach of contract occurs when one party fails to fulfil their obligations as outlined in a legally binding agreement with another party. Breaches can occur in several ways, including:

  • Failing to complete the contractually agreed-upon tasks: This could be anything from not delivering goods on time to providing a service that doesn’t meet the standards agreed to in the contract.
  • Not paying on time or at all: If a contract specifies a payment schedule and a party fails to adhere to it, they are in breach of contract.
  • Violating other terms of the agreement: Contracts often include additional terms beyond the main service or good being exchanged. Breaching these terms can also constitute a breach of contract.

A breach of contract can understandably lead to numerous challenges and complications for parties engaged in a business transaction, ranging from financial losses to the breakdown of significant business relationships.

In cases of a breach of contract, the non-breaching party may have several options, including seeking damages, specific performance (forcing the breaching party to fulfil their obligations), or termination of the contract. The appropriate course of action depends on the nature and severity of the breach, as well as any pre-approved terms laid out in the contract regarding handling any breaches or disputes.

Our team of commercial lawyers at South Bank Legal are highly experienced in assisting clients with remedies for breach of contracts, and can offer legal advice suited to your situation. If you would like to discuss your breach of contract claim with a commercial solicitor then please get in touch with us today.

Types of contract breaches

There are various types of contract breaches, including:

  • Actual Breach: This is the most straightforward kind of breach. It occurs when a party fails to perform their duties as outlined in the contract. This could be anything from not delivering goods on time to providing a service that falls short of the agreed-upon standards.
  • Anticipatory Breach: This breach happens before the deadline for performance. In this case, one party clearly communicates their intention to not uphold their obligations under the terms of the contract. Even if they haven’t missed a deadline yet, this can provide grounds for the other party to terminate the contract and potentially seek damages.
  • Material Breach: This is a significant violation of the contract that goes to the heart of the agreement. A material breach of contract substantially hinders the other party’s ability to receive the value they expected from the contract. In a material or fundamental breach of contract, the non-breaching party can often terminate the contract and sue for damages.
  • Minor Breach: A minor breach is a less severe violation. It doesn’t significantly affect the value of the contract to the non-breaching party. Here, the non-breaching party may still be able to sue for damages but may not be able to terminate the agreement.

What are the remedies for a breach of contract?

Remedies for a breach of contract vary depending on the nature and severity of the breach, as well as the terms outlined in the original agreement.

Awarding damages for a breach of contract is commonly the most adequate remedy, aiming to compensate the non-breaching party for the losses suffered as a result of the breach. Awarding damages aims to put the innocent party back in the financial position they would have been in if not for the breach occurring. Damages can be split into several categories, including:

  • Compensatory damages: This covers the direct losses and costs of the breach of contract.
  • Consequential damages: This compensates for losses that were a foreseeable consequence of the breach.
  • Nominal damages: A small amount awarded when there is a technical breach but no actual loss.
  • Liquidated Damages: A predetermined amount of damages specified in the contract that the breaching party must pay in the event of a breach.
  • Punitive damages: An amount awarded to punish the breaching party, though very rarely used in English contract law.

Specific performance may also be ordered by the court as a remedy for the breach of contract; here, the breaching party is ordered to fulfil their obligations as outlined in the contract. Specific performance orders are typically made when awarding monetary damages is not appropriate or adequate to compensate the innocent party. Similarly, a court could also order an injunction. A prohibitory injunction stops a party from further breaching contractual obligations or from engaging in actions that could cause harm or damage to the other party’s interests.

In some circumstances, the court can declare that a contract has been rescinded.

The most appropriate remedy for a breach of contract will depend on the specifics of the case and the goals of the non-breaching party. Many clients may find themselves conflicted during contract disputes as they wish to maintain amicable business relationships with the breaching party moving forward. Our solicitors can offer expert advice and assistance on various remedies to ensure ensure business partnerships remain in-tact.

How can South Bank Legal assist?

Our team of commercial contract solicitors at South Bank Legal are highly experienced in all forms of remedies to breaches of contracts and can offer you advice suited to your unique situation.

The solicitors on our team can provide specialist legal services on a wide range of commercial disputes issues. These include intellectual property disputes, multi-million-pound shareholder disputes, commercial contract disputes and property disputes.

If you are looking to take legal action or if you would simply like more advice on remedies to a breach of contract, you can contact us using the form below or telephone 02035765179 for a confidential discussion with one of our solicitors.

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