What is a Breach of Contract? A Short Guide

what is a breach of contract

Understanding the intricacies of a breach of contract under English law is crucial for effectively managing contractual relationships and protecting one’s legal rights. So, what is a breach of contract, and how can contract disputes be resolved under English law? South Bank Legal provide a comprehensive guide on your rights under contract law, the different types of breaches, and ways to effectively resolve a contract dispute.

What is a breach of contract?

A breach of contract occurs when one party fails to fulfil their obligations under the terms of the contract, without lawful excuse.

Contracts include agreements that are either in a formal written document or made verbally, with each party expecting the other to deliver goods, services or fulfil other obligations as promised.

Under the law in England and Wales, the terms and conditions within a contract are on their face legally binding, and any failure to meet these terms constitutes a breach.

Understanding contractual obligations

At the core of any contract under English law are the terms and conditions agreed upon by the parties to the contract. Those terms and conditions set our  the obligations each party must fulfil.

Terms of the contract can be explicit, written in clear language within the document, or implicit, implied from the intentions of the parties or the nature of the agreement.

Understanding the obligations set out in any contract is critical, as a breach can only occur if an obligation established by the terms of the contract is not met.

Types of breaches of contract

There are several types of breaches of contract, each with its own implications and remedies. These include:

  • Material breach of contract: This is a significant failure to perform a part of the contract that permits the other party to consider the contract as terminated and sue for damages arising from the breach of contract. This type of breach goes to the very heart of the agreement.
  • Minor, or non-material breach of contract: When the breach is less significant and does not entitle the innocent party to treat the contract as terminated. The innocent party may however still sue for damages.
  • Anticipatory breach of contract / Repudiation: This is when one party indicates in advance that they will not be fulfilling their contractual obligations, allowing the other party to terminate the contract and sue for damages immediately.

Proving a breach of contract

To prove a contract breach, it must be demonstrated that the contract existed in the first place. The claimant must also outline the obligations that were breached and, if claiming damages for the breach, show the loss that the breach has caused.

Evidence may include the written contract itself, email communications between parties and records of any failures to deliver goods or services as promised.

Legal remedies for breach of contract

The law in England and Wales offers a range of remedies for contract breaches, including:

Damages: Damages for breach of contract are the primary remedy. These are aimed at financially compensating the innocent / non-breaching party for losses caused by the breach. Damages can be:

  • Compensatory damages: To cover direct losses and costs.
  • Consequential Damages: For losses not directly caused by the breach but are a result of the breach.
  • Nominal Damages: Awarded when a breach has occurred, but no actual financial loss was suffered.
  • Punitive Damages: Intended to punish the breaching party for egregious behaviour, though rare in English contract law.

Specific Performance: If the Court orders specific performance, the breaching party will be ordered to fulfil their obligations as per the contract. This is typically reserved for situations where monetary compensation is inadequate.

Injunction: An injunction is a court order preventing the breaching party from undertaking certain actions that would further breach the contract.

Rescission: Recession effectively terminates the contract. The contract is cancelled, and both parties are returned to their pre-contractual positions.

Making a claim for breach of contract

If you have suffered a breach of contract, there are several steps you can take to address the issue and seek remedies. Review the contract: Carefully review the terms of the contract to understand the obligations of both parties and to confirm that a breach has indeed occurred. Outlined below is a general guide:

  • Gather evidence: If you wish to claim for breach of contract, the first thing you should do is compile all relevant evidence that supports your case. This may include emails, messages, documents, witness statements, and any other evidence that can demonstrate that the other party has not fulfilled their contractual obligations.
  • Attempt to resolve the dispute amicably: Before taking legal action, it’s often beneficial to attempt to resolve the dispute through negotiation or mediation. This can be quicker, less expensive, and less adversarial than going to court.
  • Seek legal advice: It is crucial to seek advice from a solicitor specialised in contract law, such as South Bank Legal. Our team can provide you with tailored advice based on the specifics of your situation and help you understand your legal rights and options.
  • Issue a Letter of Claim: If amicable resolution efforts fail, the next step is to issue a Letter of Claim. This letter outlines your claim, the remedy sought, and gives the breaching party a final opportunity to settle the matter before you initiate court proceedings. A commercial law solicitor should assist in the drafting of this letter to ensure the best outcome is achieved.
  • Initiate court proceedings: If the dispute is not resolved through the above steps, you may wish to consider initiating legal proceedings. This involves filing a claim in court, and the process will depend on the value of the claim and the complexity of the case.

What is a Breach of Contract: FAQs

Can I still enforce a verbal contract?

Yes, verbal contracts are legally binding in England and Wales, provided they meet the criteria for a valid contract (offer, acceptance, consideration, and intention to create legal relations). However, proving the terms of a verbal contract and any breaches can be more challenging than with written contracts. Evidence such as witness testimony, emails, texts, or behaviours implying an agreement can support the existence and terms of a verbal contract.

What should I do if I anticipate a breach of contract by the other party?

If you anticipate a breach of contract, consider proactive steps to mitigate potential damage. Document any communications indicating the anticipated breach. You may seek to negotiate a resolution or amendment to the contract terms. Consulting with a legal professional can provide strategic advice, including the possibility of issuing a formal notice to the other party or preparing for legal action if the breach occurs.

Are there any time limits for making a breach of contract claim?

The Limitation Act 1980 generally allows six years from the date of the breach to make a claim for breach of contract. This timeframe can vary depending on specific circumstances, such as if the contract is under seal (in which case the limit is twelve years). It is crucial to initiate legal action within these timeframes to avoid losing your right to claim.

Can I claim for a breach of contract if the breach hasn’t caused me any financial loss?

Yes, you can still bring a claim for breach of contract even if you haven’t suffered any financial loss. In such cases, you may be awarded nominal damages by the court, acknowledging the breach occurred but recognizing that it didn’t result in financial harm.

Nominal damages serve as a legal recognition of your rights being infringed upon without compensating for actual loss.

Can legal costs be recovered in a breach of contract claim?

In most cases, the winning party can recover their legal costs from the losing party. However, this is not guaranteed and depends on the specifics of the case and is at the discretion of the court.

Contact South Bank Legal today

Our breach of contract solicitors cover all types of contract disputes. We can provide professional advice and representation to both individuals and businesses.

For more information regarding breach of contract claims or further legal advice, you can contact South Bank Legal using the contact form below, or call 02035765179 for a confidential discussion with a solicitor today.

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