How to Resolve a Breach of Contract
Having a legally enforceable contract is vital otherwise, being able to resolve any issues will be very difficult.
There are a few options for resolving a breach of contract, but first, it needs to be established that a valid contract was in place and that direct loss was caused as a result of the breach.
This post will go through how a breach of contract can be resolved.
What is an Action for Breach of Contract?
A breach of contract happens when someone violates the terms of the contract. Taking action for a breach of contract means that you are trying to seek a resolution or claim back some kind of damages for the loss that has been caused.
A breach of contract could include failing to complete work such as builders not finishing the agreed refurbishment on your house or where there is a delay in completing work such as if you had an agreed end date and this was not met.
Before you can claim for a breach of contract, it firstly needs to be established whether the contract is valid and enforceable. A contract can be breached if written, verbal, or implied.
A breach of contract occurs when:
- One party fails to execute the duties agreed upon in the contract.
- The work done is defective.
- One party fails to pay for a service provided or does not pay according to the terms of the agreement.
- One party does not deliver the agreed goods or services.
- One party delays service delivery without reasonable justification.
Types of Breach of Contract
The different types of breach of contract can include the following:
1. A minor breach of contract
A minor breach happens when you do not receive the goods or services by the expected date. It also includes instances where one party delivers substitute goods instead of what is stated in the contract. For example, a dressmaker brings your dress a day after it is due or offers a different coloured dress.
2. A material breach of contract
This type of contract breach happens when the items you receive are not what was agreed on. It is a breach that affects the project negatively where you would not have agreed to the contract if the other party had not guaranteed this term.
An example is when a supplier supplies different goods or goods of inferior quality from the ones in the agreement.
3. A fundamental breach of contract
Also known as a “repudiatory breach”, the violation is so severe that it reaches the core of the agreement. It denies the innocent party a significant part of the contract’s benefit, and the consequences would leave them to seek compensation.
For example, if a contractor exits your construction project before the contract expires, you must terminate it.
4. An anticipatory breach of contract
An anticipatory breach of contract arises when one party declares that they will not fulfill a condition or a term of the contract. Sometimes, it is evident to one party that the other party does not intend to perform their contractual obligations, even before the contract expires.
What Must be Proved for Breach of Contract?
You must prove the following before you can claim a breach of contract:
1. The existence of a contract
A contract is a legally binding arrangement or promise between at least two parties. It only exists in the presence of three crucial elements:
- An offer by one party and another accepts it.
- Both parties demonstrate a clear intention to undertake the agreement legally.
- A consideration where one party commits to do something and, in return, receives a benefit, interest, or right from another party. For example, one party promises to pay for goods or services obtained from the other party.
2. One party breached the agreement
The person claiming the breach (claimant) must clarify the terms of the contract and demonstrate that the other party did not meet their contractual obligations. They must provide evidence of the responsibilities and how the other party did not meet or perform them to the expected standard.
3. The breach resulted in a loss
The applicant must prove that they suffered loss as an immediate effect of the breach and should be reimbursed for the loss. However, they are expected to have taken reasonable action to mitigate the loss and reduce the impact of the contract breach.
What are the Remedies for Breach of Contract?
If you find that you have been affected by a breach of contract since the other party to the agreement has not followed through on their promises, then there are a few routes you can follow to find solutions.
Repudiation is where one party acts in a way that shows they do not intend to accept their contractual obligations further. A repudiatory breach effectively deprives the aggrieved party of the significant value of the contract.
The innocent party may accept the repudiation and terminate or affirm the contract, allowing it to continue. The aggrieved party can still claim compensation regardless of whether they end or continue the contract.
The sole purpose of damages is to put someone back in the position they would have been in had the breach not occurred.
UK law does not include punishment when awarding damages, meaning a claimant can only receive compensation for actual loss.
There are two types of damages:
- General damages: Awarded for unquantifiable losses, like physical inconvenience or loss of amenity.
- Special damages: This is compensation for quantifiable losses, like loss of expected profits.
An aggrieved party can claim liquidated damages if the contract includes a specific amount to be paid in case of a breach.
To successfully sue for damages due to a breach of contract, the applicant must prove the existence of the contract, the violation of the agreement, and the steps they took to mitigate the loss.
Before pursuing a claim for breach of contract, assessing your claim’s merits and considering the outcome you want is essential. It is also critical to explore alternative dispute resolution methods to minimise costs.
At Ackroyd Legal, no matter the situation, we have the skills and expertise to help you reach a favourable solution. If you would like further information on how we can help you, please do not hesitate to contact us today on 020 3058 3363 or email email@example.com