A breach of contract occurs when one party to a legally binding agreement fails to perform their obligations as set out in the contract, without lawful justification. In the UK, contract law is governed largely by common law principles and is fundamental to both commercial and personal transactions.
To bring a claim for breach of contract, there must first be a valid contract. This requires:
- Offer and acceptance,
- Consideration (something of value exchanged),
- Intention to create a legal relationship, and
- Certainty of terms.
Once a valid contract exists, any failure by a party to perform their part of the bargain may constitute a breach.
Types of Breach
UK law recognises several forms of breach, each with different legal consequences:
- Minor (or Partial) Breach: A less serious failure, such as a slight delay or a small defect. It may not entitle the innocent party to terminate the contract, but they can still claim damages.
- Material Breach: A significant failure that affects the essence of the contract. This allows the non-breaching party to terminate the agreement and claim damages.
- Repudiatory Breach: A breach so fundamental that it entitles the innocent party to end the contract immediately and seek full compensation. Examples include failure to pay, deliver, or perform a central obligation.
- Anticipatory Breach: Occurs when one party indicates in advance that they will not fulfil their contractual obligations. The innocent party can treat the contract as breached before the actual deadline.
Examples of Breach of Contract
- A contractor fails to complete building works by the agreed deadline, causing the client to suffer losses.
- A tenant breaks a lease agreement by vacating the property early without notice or payment.
- A business supplier delivers goods that are defective or not as described.
- A client refuses to pay a service provider after services have been performed according to the agreement.
Legal Remedies for Breach
If a breach of contract occurs, the injured party may seek one or more of the following remedies:
- Damages: The most common remedy. These may be:
- Compensatory: To place the innocent party in the position they would have been in had the contract been properly performed.
- Consequential (or special): To cover additional losses that were foreseeable at the time the contract was made.
- Specific Performance: A court order requiring the breaching party to perform their contractual obligations. This is usually only available when damages are inadequate, such as in contracts for the sale of unique goods or property.
- Injunctions: A court order preventing a party from doing something that would breach the contract.
- Termination of Contract: If the breach is serious enough, the non-breaching party may be entitled to terminate the contract and sue for losses.
- Restitution: In some cases, the innocent party may be entitled to reclaim money or property transferred under the breached contract.
Why Legal Advice Matters
Whether you are bringing or defending a breach of contract claim, seeking early legal advice can be critical. Breach claims often depend on the specific wording of the contract, the nature of the breach, and the impact on the innocent party.
At our London office, our experienced contract law solicitors assist individuals, SMEs, and large businesses with:
- Drafting and reviewing contracts to minimise future risks
- Advising on potential breaches and your legal position
- Negotiating settlements or taking formal legal action if necessary
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
