What is a Breach of Contract?

Breach of contract: this is something which anyone can risk facing if they enter into a legal contract.  

Especially if you deal with large volumes of agreements as this will increase your chances of falling victim to a contract which isn’t fulfilled on the terms agreed by all parties involved. 

It is always important to have the right contract in place for any business transaction however even if you have an outstanding previous relationship with the other parties, sometimes a breach in the contract cannot be stopped. 

So what is a contract, how can it be breached and what remedies are available? 

What is a Contract? 

Before we find out what a breach of contract is, we first need to know what a contract is. 

A contract is a promise or an agreement between two or more parties that is legally binding. There are three vital elements that must be present in a contract, these are: 

• There must be an offer made to one party, which is then accepted by another 

• The parties must have had a clear intention to be legally bound by the terms of the agreement 
• There must be a consideration (such as where one party promises to pay money in order to receive a benefit promised by the other party, for example, goods or services). 

What is a Breach of Contract? 

In a contract, each party is entitled to ‘perfect performance’ regarding the agreed-upon terms of the contract by the other party. 

A party will be in breach of the contract if they fail to uphold the agreed terms set in the contract. 

There are three most common forms of breaches of contract: 

• Defective performance: This is when a contract is partially performed but does not meet the standards required by the contract. 
• Delayed performance: When a contract is fulfilled but not within the agreed time frame. 
• Complete non-performance: The party does not fulfil the contract in any sense. 

Let’s look further into what makes a breach of contract and how it can be remedied. 

What Are the Elements of a Breach of Contract? 

In order to bring a breach of contract claim, the non-breaching party must show that there is a sufficient connection between the breach and the loss it has suffered. The breach must be the effective or dominant cause of a loss. 

To make a claim for a breach of contract, you will need: 

A legally binding contract which can be: 

1. Express contract (oral or written communication) 
2. Implied contract (implied by conduct) 

Non-compliance with one or more of the legally binding terms of that contract and it must be: 

1. Express terms (terms are written in the contract) 
2. Implied terms (terms not written but might be implied into the contract by the way the law works) 

The express or implied term must be a: 

1. Condition (most important terms of a contract) 
2. Warranty (minor terms of the contract) 
3. Indominate term (intermediate terms, serious consequences of breaching the term is looked at instead of the importance of the term itself) 

An example of a breach of contract could be contracting a builder who fails to complete the work in a specific time frame.  

Having a legally binding contract with a builder will have terms written in the contract such as timeframe, building materials to be used and price amongst other things. If the builder fails to complete the work in the time frame or uses the wrong materials, then this could be a breach of contract. 

If you believe you have a breach of contract claim, instruct a solicitor as soon as possible to get expert legal advice. 

Remedies For a Breach of Contract 

The final hurdle to overcome is to show that the innocent party suffered a loss as a direct consequence of the breach of contract and should be compensated in damages for the loss caused. Generally, in assessing the level of damages to be awarded, the court will consider the following factors: 

• What position the claimant would be in had there not been a breach of contract. 
• Whether the claimant has taken reasonable steps to mitigate their loss. 
• Whether the loss caused to the claimant was reasonably foreseeable by both parties at the time the contract was made. 

When suffering from a breach of contract, the innocent party has multiple ways to deal with this breach such as: 

• Damages (monetary compensation) for failures to perform the contract 
• The right to terminate the contract 
• Injunction to restrict further breaches of contract 

The terms of a contract can change the rights of the innocent party and remove the ability to claim available remedies. It is vital to get a legal professional involved to determine whether you have a claim and if so, what remedies are available to you. 

If you believe you have a breach of contract claim, it is always best to instruct a legal professional as soon as possible to learn more about your rights.  

Protecting your business falls on you. But so do a hundred other duties.  You need a solicitor you can trust to deliver practical, cost-effective solutions which work for you. And without having to continually chase them to move things forward! 

We build long term legal relationships so that you receive first-class legal business support and insight when you need it. All aimed at helping you deliver success and gain peace of mind. 

Get in touch now if you need legal advice about a breach of contract claim.