Breach of contract claims: A short guide

What is a breach of contract?

Under English contract law, a breach of contract occurs when one party fails to fulfil obligations of the contractual terms without a lawful excuse. This failure can take many forms, such as failing to deliver goods or services, failing to make payment, or failing to meet a deadline.

A breach of contract can be either a material breach or an immaterial breach.

A material breach is a breach that goes to the root of the contract, making it impossible for the other party to receive the benefit of the contract.

An immaterial breach, on the other hand, is a breach that does not fundamentally affect the contract, and may not entitle the innocent party to terminate the contract or seek damages.

In the event of a breach of contract, the innocent party may seek remedies such as damages, specific performance, or an injunction by pursuing a claim. The appropriate remedy will depend on the circumstances of the breach and the terms of the contract.

To find out if you could bring a claim for breach of a legally binding contract, read our guide below.

Types of contract breach

There are several types of breach of contract claims that can arise depending on the nature and circumstances of the breach. It is recommended that you seek legal advice before starting a breach of contract case. Some common types of breach of contract claims include:

Anticipatory breach:

This occurs when one party informs the other party that they will not be able to perform their obligations under the contract before the performance is due. The innocent party can then treat this as a breach of contract and take legal action.

Material breach:

This is a breach that goes to the heart of the contract and deprives the innocent party of the main benefit of the contract. The innocent party can terminate the contract and claim damages.

Minor breach:

This is a breach that does not go to the heart of the contract, but still constitutes a breach of the contract. The innocent party can claim damages but cannot terminate the contract.

Fundamental breach:

This is a breach that is so serious that it undermines the entire contract. The innocent party can terminate the contract and claim damages.

Repudiatory breach:

This is a breach that shows that the party in breach no longer intends to perform their obligations under the contract. The innocent party can terminate the contract and claim damages.

Breach of warranty:

This is a breach of a term in the contract that is not a condition or an innominate term. The innocent party can claim damages but cannot terminate the contract.

Breach of condition:

This is a breach of a term in the contract that is fundamental to the contract. The innocent party can terminate the contract and claim damages.

The appropriate legal remedies available to the innocent party will depend on the type of breach of contract claim and the specific facts of the case.

Making a breach of contract claim

To make a breach of contract claim, the following elements must generally be established:

Formation of a contract:

There must be a valid and enforceable contract between the parties, with clear terms and obligations.

Breach of the contract:

You must be able to prove that a contract breach occurred by one of the parties. A breach may include failure to perform a contractual obligation or a failure to comply with the terms of the contract, including implied terms.

Materiality of the breach:

The breach must be material, meaning it goes to the heart of the contract and deprives the innocent party of the main benefit of the contract.

Loss suffered:

The innocent party must have suffered loss as a result of the breach, such as financial loss or damage to reputation.

Causation:

The loss suffered must be caused by the breach of the contract.

Mitigation:

The innocent party must have taken reasonable steps to mitigate their loss, such as finding alternative suppliers or customers.

Time limits:

There may be time limits for bringing breach of contract claims, depending on the terms of the contract and the applicable law.

If all of these elements are present, the innocent party may be entitled to remedies for a breach of contract such as damages, specific performance, or an injunction. However, the specific remedies available will depend on the facts of the case and the terms of the contract.

Breach of contract claims process

Under the Civil Procedure Rules (CPR) in England and Wales, there is a pre-action protocol for breach of contract claims. The pre-action protocol sets out a series of steps that parties should take before starting court proceedings, with the aim of resolving the dispute without the need for litigation.

The pre-action protocol for breach of contract claims includes the following steps:

1. Letter of claim: The claimant must send a letter of claim to the defendant, setting out the details of the breach of contract and the remedies sought. The letter should also include relevant documents and evidence.
2. Response: The defendant should respond to the letter of claim within a reasonable time, setting out their position on the claim and any evidence or documents they wish to rely on.
3. Alternative dispute resolution (ADR): The parties should consider using ADR to resolve the dispute, such as mediation or arbitration. If ADR is used, the parties should agree to suspend the pre-action protocol while the ADR takes place.
4. Court proceedings: If the dispute cannot be resolved through ADR, the claimant may start court proceedings. However, the parties should continue to exchange information and consider settlement throughout the proceedings.

The pre-action protocol for breach of contract claims aims to encourage early communication and settlement between the parties, with the aim of avoiding costly and time-consuming court proceedings. Parties that fail to comply with the pre-action protocol may face penalties, such as costs sanctions, if they are successful in their claim.

Remedies for breach of contract

Remedies for breach of contract are designed to address and rectify the harm caused by one party failing to fulfil their contractual obligations. The main types of remedies available are:

Damages

Damages for breach of contract are the most common. The aim is to put the injured party in the position they would have been in if the contract had been performed as agreed. Types of damages include:

• Compensatory Damages: These are intended to compensate the injured party for the loss suffered. They can include direct losses and, in some cases, consequential losses.
• Nominal Damages: These are awarded when a breach has occurred, but the non-breaching party has not suffered any actual loss. The damages are typically a small, symbolic sum.
• Liquidated Damages: These are predetermined damages agreed upon by the parties at the time of contract formation, intended to cover specific breaches.
• Punitive Damages: Although rare in English contract law, punitive damages may be awarded in exceptional cases to punish the breaching party for egregious behaviour.

Specific Performance

Specific performance is an equitable remedy that requires the breaching party to perform their contractual obligations. This remedy is typically used when damages are insufficient to remedy the breach, such as in contracts involving unique or rare items (e.g., real estate, rare artwork).

Injunction

An injunction is a court order that either compels a party to do something (mandatory injunction) or prohibits a party from doing something (prohibitory injunction). This remedy is used to prevent ongoing or future breaches of contract.

Rescission

Rescission involves cancelling the contract and returning the parties to their pre-contractual position. This remedy is available in cases where there has been a fundamental breach, misrepresentation, undue influence, or mistake.

Restitution

Restitution aims to prevent the breaching party from being unjustly enriched at the expense of the non-breaching party. It involves returning any benefits or gains received under the contract to the injured party.

Repudiation

Repudiation occurs when one party indicates that they will not perform their contractual obligations. The non-breaching party can accept the repudiation, treat the contract as terminated, and seek damages for the breach.

Rectification

Rectification is an equitable remedy that allows the court to amend the written terms of a contract to reflect the true intentions of the parties. This remedy is used when there is a mistake in the contract that does not accurately represent the agreement.

Declaratory Relief

A declaratory judgment is a court statement that determines the rights and obligations of the parties without ordering any specific action or awarding damages. This can help clarify the parties’ positions and prevent future disputes.

How our panel of solicitors can assist

If you were party to a contract that has been breached and you suffered a loss as a result, a solicitor from our panel may be able to assist based on the merits of your claim.

Our team take the stress out of finding you a solicitor to assist on your commercial law issue. We have assisted many UK businesses and individuals in finding the right lawyer for their case, providing cost effective solutions to commercial litigation.

We are not a firm of solicitors; however, we have a panel of commercial law solicitors who are authorised and regulated by the Solicitors Regulation Authority. If you contact us in relation to a commercial law case, we will pass your case onto a panel firm. We receive a fee from solicitor firms in return for passing your case on; however, we will never charge you for our services.

Our panel of commercial solicitors assist on a wide range of cases, including breach of contract claims.

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