Legal solutions to breach of commercial contract

What is a breach of contract?

A breach of contract means that one or more of the terms and conditions in a contract has been broken. Breaching terms may lead to a professional relationship breaking down completely, as well as legal action, claims for damages in court.

Such disputes can cost you time and money, not to mention drain the time and energy you want to be putting into running your business. They can even affect your ability to deliver on your other contracts, which could risk further litigation.

What are the important facts to consider in a breach of contract dispute?

If you breach a commercial contract, or think someone may have broken a contract you were part of, the first things you need to establish are:

• Is there is a written contract and if so, what does it say?
  Is your contract a business-to business, or business-to-consumer arrangement? If it's the latter, you should ensure the contract does not abuse the customer’s statutory rights.
  If the contract includes terms that are implied rather than explicit, this could mean the court dismisses the case because it deems the terms unfair.
• Check for evidence of any changes to the written terms
  Changes could appear in ensuing emails and correspondence. Each party should be as clear as possible as to the latest terms and should agree to them.
• Be aware of waiving the breach
  There are ways for you to waive a breach, such as through delay, where a court may deem certain actions have lost you the right to take action.
• Be aware that separate contract clauses have different implications
  For example, if the issue relates to a fundamental breach, as opposed to an anticipatory or other type of breach, then your options and remedies may be very different.

What are the principles the law considers when deciding the extent of damages?

There are many principles that the law uses to determine what alleged losses are recoverable for breach of contract. Some of the key factors to consider include remoteness, causation and mitigation.

These mean the loss must not be too remote or indirect to recover, and the party bringing the claim must prove that the breach caused loss.

Also, the party bringing the claim cannot recover damages for any part of the loss they incurred through a lack of due care on their part. The law refers to this as the duty to mitigate.

How can I keep the dispute out of the courts?

In practice, contract breach disputes may well be resolved out of court, likely with the help of solicitors. This can be because businesses don’t wish to risk going to court, or incurring the costs of litigation.

A good commercial solicitor will do the following to help reduce the risk of going to court:

• Review the dispute provisions in the contract and suggest these as a means to resolve any issues.
• Help you prepare for mediation meetings. Your solicitors can tell you what evidence to produce, how to produce it, and offer advice on the key points you should make in your defence.
• Provide advice on the use of experts e.g. someone who can attest you were not to blame for what occurred.
• Determine the amounts that make an out of court settlement attractive for both you and the other party to accept.

My business is facing breach of contract litigation – what should I do next?

Our commercial law solicitors can help you resolve a breach of contract dispute in ways that better suit your needs and those of your business.

You can contact our legal advisors now, or one will ring you if you fill out the Request a Callback form at the top of the screen.  They will discuss your requirements with you, free of charge and you can then decide whether you'd like to proceed with our legal services.