What You Need to Know About Breach of Contract
Contracts play a crucial role in both our personal and professional lives. They are binding promises that help keep businesses and relationships on fair and friendly grounds. When one side fails to keep their word, the consequences can range from a small inconvenience to a serious financial crisis. At Davis Law in Buckinghamshire, breach of contract is one of the many situations we handle. Whether you are a business owner let down by a supplier or an employee in a dispute over your terms, knowing how contract law works is the first step to resolving the issue. A legal agreement is more than just a formality. It is a commitment you can enforce. If someone fails to meet their obligations, the law gives you a way to seek a fair solution.
What Is a Breach of Contract?
At its core, defining a breach of contract is somewhat straightforward. It occurs when a binding agreement is not honoured by one or more of the parties involved. Under the law, a breach occurs when a party fails to perform their obligations in full or performs them in a manner that falls short of the standard set out in the contract. This failure to deliver on a promise is what constitutes breach, transforming a personal disappointment into a legal issue that courts can adjudicate. Effectively, if someone has breached an agreement, the innocent party is entitled to ask the court for a remedy through civil litigation.
Types of Breach of Contract
Not all breaches of contract are treated the same by courts. The exact type of breach will dictate how you can seek compensation. So, as a first step, it is often a good idea to identify the type of breach you are facing, as it may determine your first steps. The different types of breaches include:
- Minor Breach: Also known as a partial breach, this occurs when the core of the contract is fulfilled, but a small detail is missed, such as a builder using a different brand of paint than specified.
- Material Breach: This is a more serious violation of the contract that defeats the purpose of the agreement, such as receiving a delivery of laptops when you ordered desktops, allowing the injured party to claim damages.
- Fundamental Breach: If one party refuses to fulfil their side of the contract altogether, it may constitute a fundamental breach, allowing the other party to cancel the contract and recover damages.
- Anticipatory Breach: This occurs when one party indicates, through words or actions, that they will not fulfil their obligations before the deadline, allowing the other party to take legal action immediately.
A Few Common Examples
In the real world, a violation of a contract agreement can look like a freelancer failing to meet a project deadline or a supplier delivering perishable goods that are already spoiled. A classic scenario involves a breach of employment contract by an employee, such as a senior manager taking confidential client lists to a competitor in direct violation of restrictive covenants. Similarly, breach of contract employment agreement disputes often arise when an employer fails to pay the agreed notice period or changes working conditions without consultation. These breach of contract examples highlight that disputes can occur in any context, from a homeowner refusing to pay a contractor for unfinished work to a tenant subletting a property without permission.
How Breach of Contract Occurs
A breach of contract can occur for many reasons, from miscommunication to the intentional neglect of one’s agreed-upon responsibilities. Maybe supply chain issues have prevented a company from delivering goods by a specific date. Perhaps a company has calculated that paying for a breach is a better financial option for them than fulfilling their contractual obligations. Whatever the reason may be, a breach has occurred once one party violates the terms of the agreement.
How to Make a Breach of Contract Claim
To launch a successful breach of contract claim, you must first prove that a legally binding contract existed and that the other party failed to uphold their end of the bargain. That requires the gathering of robust evidence, such as emails, signed documents, and proof of financial loss, to substantiate your assertion that a breach of contract claim is warranted. It is vital to assess the actual damage caused, as compensation is generally designed to put you back in the financial position you would have been in had the contract been performed properly. Before rushing to court, specific pre-action protocols usually require you to attempt resolution, making it wise to seek advice from solicitors like the ones at Davis Law.
When to Involve Breach of Contract Solicitors
It can be tempting to try to resolve contractual breaches on your own, but if the outcome truly matters, this is an inadvisable and high-risk decision. When your personal or professional finances depend on the fulfilment of a contract that has been breached, you need to ensure that your compensation is fair. The only way to truly understand your options for recourse is to speak to a legal professional, such as Davis Law.
Schedule a Consultation Today
Resolving a legal dispute is rarely pleasant, but understanding breach of contract empowers you to protect your interests and demand the fairness you are owed. Whether you are seeking damages or specific performance, the goal is to close the chapter on the dispute and move forward with clarity and security. Contact us today to schedule a consultation.
Frequently Asked Questions
Can you terminate a contract for breach of contract?
In contract law, the specifics of the situation always matter, but in some cases, you can terminate a contract due to the other party’s breach. Typically, this only applies if the breach is “material” or “fundamental,” meaning it goes to the core of the agreement. Minor breaches usually only entitle you to claim damages, not to end the contract entirely.
Are damages for breach of contract taxable?
If damages are replacing lost trading income or profits, they can be subject to tax. However, if the payment is for damage to a capital asset or personal injury, the tax treatment might differ. You should always speak to a tax expert to understand your specific tax obligations.
What is a fundamental breach of contract?
A fundamental breach is a violation so serious that it undermines the entire purpose of the contract, effectively depriving the innocent party of the benefits of their side of the agreement. It allows the aggrieved party to terminate the contract immediately and sue for damages.
Does breach of contract make it null and void?
Not necessarily. A breach does not automatically make a contract void. The contract remains valid, but the innocent party may have the right to terminate it. “Void” implies the contract was never legally valid in the first place, whereas a breach happens to a valid contract.
What is a material breach of contract?
A material breach is a significant failure to perform a key duty within the contract, such as failure to pay or failure to deliver goods. It usually enables the innocent party to claim damages and potentially end the agreement.
What happens after a contract breach?
The innocent party must usually take steps to mitigate their loss and then formally notify the other party of the breach. This is often followed by negotiation, mediation, or legal proceedings to secure compensation or specific performance.