Most business relationships run on the strength of a contract, whether that’s a supply agreement, a services contract, or terms agreed with a customer. When one side doesn’t hold up their end of the bargain, it can disrupt cash flow, damage relationships and put projects at risk. Knowing your options when a contract is broken can help you respond effectively, rather than losing time and money while the situation drifts.
What counts as a breach of contract?
A breach occurs when one party fails to perform an obligation set out in a contract, whether that’s late delivery, poor quality work, non-payment, or failing to meet an agreed specification. Breaches can be minor, causing limited disruption, or serious enough to undermine the whole purpose of the agreement.
What should you check first?
- What does the contract actually say about the obligation in question?
- Are there any clauses dealing specifically with delay, defects or termination?
- Is there a dispute resolution or notice procedure you’re required to follow first?
- Are there limits on liability, or a cap on the damages you could recover?
Reviewing the contract terms closely, before taking any action, often shapes what options are realistically available.
What remedies are available?
- Damages: financial compensation intended to put you in the position you would have been in if the contract had been performed
- Specific performance: a court order requiring the other party to actually carry out their obligations, used where damages alone wouldn’t be adequate
- Rescission: cancelling the contract and restoring both parties to their original position, available in more limited circumstances
- Injunction: a court order preventing a party from doing something, such as breaching a confidentiality or restrictive covenant clause
In practice, most disputes are resolved by agreeing damages or a commercial compromise rather than going to court.
Do you have to go to court?
No, and in most cases it’s sensible not to jump straight there. Negotiation, a formal letter before action, or mediation can often resolve a dispute more quickly and at lower cost than litigation. Court proceedings are generally seen as a last resort, reserved for cases where the other side won’t engage or where a point of principle needs to be settled.
Time limits
Claims for breach of a simple contract must generally be brought within six years of the breach, or twelve years if the contract was made as a deed. That said, the earlier you seek advice, the more evidence is available and the more options remain open to you.
Frequently Asked Questions About Breach of Contract Claims
What’s the difference between damages and specific performance?
Damages are a financial payment intended to compensate you for your loss. Specific performance is a court order requiring the other party to actually carry out what they agreed to do. Courts award specific performance far less often, generally only where damages wouldn’t adequately compensate you.
Do I have to try to resolve things before going to court?
In most cases, yes. Courts expect parties to attempt to resolve disputes through negotiation, a formal letter before action, or mediation before issuing proceedings, and can penalise a party in costs for failing to do so.
What if the contract doesn’t say what happens if it’s broken?
Even where a contract is silent on a particular issue, general contract law principles will usually fill the gap, for example the right to claim damages for a breach. That said, contracts without clear terms can make disputes more complicated to resolve, which is why careful drafting matters from the outset.
Can I claim for losses that weren’t directly caused by the breach?
Generally, you can only claim for losses that were reasonably foreseeable at the time the contract was made. This is a legal principle known as remoteness of damage, and it can significantly affect the value of a claim.
How Oliver & Co Solicitors Can Help
At Oliver & Co, we are employee-owned and focused on protecting our clients’ commercial interests. Our Dispute and Litigation team can review your contract, explain your options and help you resolve the dispute in the most effective way. Contact us today on 01244 312306 or email law@oliverandco.co.uk to discuss your situation.
