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Breach of Contract – A Simple Guide

What is a Breach of Contract?

A breach of contract in the UK occurs when one party fails to fulfil its obligations as outlined in a legally binding agreement between two or more parties.

This failure to perform can happen in various ways, such as not delivering goods or services as specified, not paying the agreed-upon amount, or not meeting the quality standards defined in the contract.

Different Types of Breaches

Breach of contract can happen in both a written contract and an oral contract. There are different types of breaches:

Material Breach: This is a significant violation of the terms of the contract that goes to the root of the agreement. It is substantial enough to release the other party from their obligations under the contract and may entitle the injured party to sue for damages.

Minor Breach: This is a less serious violation of the terms of the contract. While it doesn’t fundamentally undermine the contract, the injured party may still seek damages or request the other party to fulfil their obligations.

Anticipatory Breach: This occurs when one party indicates, either through words or actions, that they will not fulfil their obligations in the future. The other party can treat this as an immediate breach of contract and seek remedies.

Actual Breach: This is the most common type of breach, where one party simply fails to fulfil their contractual obligations within the agreed-upon time or in the agreed-upon manner.

Remedies Against Breach of Contract

When a breach occurs, the innocent party may have various options, such as:

Seeking Damages: This involves claiming monetary compensation for losses incurred due to the breach. You can be awarded Special Damages; which is awarded for quantifiable losses such as loss of profits. Or General Damages; which is awarded for unquantifiable losses such as loss of amenity or physical inconvenience.

Specific Performance: In some cases, a court can order the breaching party to fulfil their obligations as outlined in the contract.

Cancellation or Termination: The innocent party may choose to terminate the contract due to the breach and seek restitution for any losses suffered.

Rescission: The contract may be declared void, and both parties are released from their obligations.

Injunction: A court order may prevent the breaching party from taking certain actions, such as
disclosing confidential information, in cases where money damages are insufficient.

Quantum Meruit: In cases where one party has partially performed their obligations before the
breach, they may be entitled to payment for the value of the work they’ve done.

How to prove a Breach of Contract

1. Prove that there was a contract in existence; you would need to prove that there was a legally binding contract in place that had been breached.

2. Prove that the other party did not perform their part of the contract.

3. Prove that you suffered a loss as a result; the innocent party to prove that there was a loss owing to the breach of contract and this loss requires compensation.

It must be noted that the party who suffered losses took reasonable steps to mitigate its losses to reduce any impact the breach of contract had.

Limitation Period

There is a limitation period in the UK for bringing a claim for breach of contract, which is generally six years from the date of the breach. However, for some types of contracts, this period might vary.

Legal Proceedings

If a dispute arises due to a breach of contract, the innocent party can seek resolution through
negotiation or alternative dispute resolution methods like mediation. If these methods fail, court
action may be necessary.

Specific Legislation and Regulations

Various laws and regulations apply depending on the type of contract (e.g., sale of goods, employment contracts, consumer contracts). These laws include the Sale of Goods Act, the Consumer Rights Act, and others, offering protections and specific remedies for different types of contracts.

Need Help?

It’s essential to consult a solicitor to understand the specific circumstances of the breach, the terms of the contract, and the available legal remedies in the UK. The course of action and available remedies can vary depending on the nature of the breach and the terms outlined in the contract. Contact us now for an honest appraisal of your matter concerning Breach of Contracts. For further information about the subjects discussed in this article please contact our Litigation team at AMH.

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