It is always very important to have the right contract in place when proceeding with a transaction.
Indeed, regardless of the pre-contract conducts, agreements between the parties prior to the execution of the transaction, and paperwork prepared for a transaction, it can often go wrong, and a breach of contract is happening more often than we know.
This article gives an understanding of what breaches of contract can occur and the remedies available.
A Valid Contract
First of all, it is important to be sure a contract was formed. Indeed, English law allows the contract to be oral or written, and some terms can even be implied, but there are also four elements that characterize the existence of a contract.
The first element is a valid offer, which must then be accepted, the acceptance. Then there must be consideration, which means the price given for services or goods or a promise to do (or not to do) something in return.
The final element is the intention to create legal relations between the parties.
What Is A Breach Of Contract?
A breach of contract can occur in many different ways.
If the other party refuses to perform their obligation, for example. Or if they decide not to pay for the service you have provided. They can also be late for payment of the goods agreed on in the contract that does not match their contractual description.
These breaches normally fall within four different categories of breaches:
- A minor breach can occur when the breach of the contract is so inconsequential that the remaining of the contract can still be performed. For example, where obligations under the contract have been partially executed or where goods have been substituted by other goods that seem to fit from the other party’s point of view.
- A material breach is when the breach has adverse consequences on the goods or services provided to the extent that the contract cannot be performed, as the breach goes to the heart of the contract.
- A fundamental breach, or repudiatory breach, is when the breach is so important that the innocent party will seek termination of the contract rather than damages.
- An anticipatory breach is when a party expressly states that they will not perform the contract.
What Are The Remedies For Breach Of Contract?
The choice of remedies really depends on the circumstances of an individual. Some remedies are meant to be discussed at the final stage of a claim, but some remedies, called interim, are meant to happen before or during the proceedings and before the resolution of litigation.
- Repudiation means the right to terminate the contract and seek compensation for the loss the innocent party might have suffered from.
- Damages are intended to put the innocent party in the position they would have been in if the obligations pursuant to the contact had been fulfilled. Damages can be special where the loss is quantifiable or general for unquantifiable losses. It is important to note that English law does not allow punitive damages, which means only the loss is compensated.
- Specific performance can be obtained by way of Court order to force the other party to complete their contractual obligations. However, this would not apply where constant supervision would be necessary to force the other party to perform their obligations.
- Rescission, putting the pares back to the position they were in before the existence of the contract.
- Injunctions, to force a party to do or not to do something. Injunctions can be sought before the resolution of litigation
The expectations when bringing a breach of contract claim
When bringing a claim for breach of contract, one must prove that there was a contract in place, that the other party has breached such contract, and that you suffered losses as a consequence of the breach. In addition, you will be required to mitigate your loss, which means do what you can to limit the loss you are suffering from, as the Court will not allow losses to be recovered if they could have been avoided.
The parties should also consider other dispute resolution means such as arbitration or mediation to try to settle the case outside of the Courts.
Finally, it is important to know that as a general rule, which application will depend on the particular circumstances of an individual, the winning party in court can recover their costs from the losing party to a certain extent.
Due to the complexity of dispute resolution, it is important to discuss the above with a professional so you can be given the best advice as to what remedies are available to you and the likely outcome of your case.
Please do not hesitate to contact our Dispute Resolution Team for more information.
Disclaimer: The information on the TV Edwards website is for general information only and reflects the position at the date of publication.