Defences to Breach of Contract

In contract law, a breach of contract occurs when one party fails to fulfil their obligations as specified in the agreement. When such a breach occurs, the non-breaching party generally has the right to seek remedies, including compensation for losses.

However, the party accused of breaching the contract may have viable defences that can either reduce or entirely eliminate their liability. These defences serve to justify or excuse the failure to perform and protect the accused party from the consequences of the breach.

At Expert Commercial Law, we have access to a highly experienced panel of commercial contract lawyers who are available to assist you with your case. If you are wondering how we can assist on your case, then please contact us today.

What is a breach of contract?

A breach of contract occurs when one party fails to fulfil their obligations under the terms of a legally binding agreement, without a valid legal excuse. This failure can take several forms, such as not performing on time, not performing in accordance with the terms of the contract, or not performing at all. There are many different types of breaches of contracts, including:

Minor (or partial) breach: A minor breach occurs when a party fails to perform a small part of their contractual obligations, but the essential purpose of the contract is still met. While it may not release the non-breaching party from their duties under the valid contract, they may seek compensation for any damages caused by the partial breach.

Material (or fundamental) breach: A material breach is a serious violation that goes to the heart of the contract. It significantly impacts the contract’s purpose or the value of the bargain for the non-breaching party, who may have grounds to terminate the contract and sue for damages.

Anticipatory breach (or repudiation): This occurs when one party indicates (through words or actions) that they do not intend to fulfil their future obligations under the contract. The non-breaching party may respond immediately by treating it as a breach and seeking remedies.

Actual breach: An actual breach occurs when a party outright fails to perform their contractual duty when it is due.

Breach of contract claims allow the non-breaching party to seek remedies. This is often in the form of damages, specific performance, or contract rescission, depending on the nature of the breach and the terms of the agreement.

Remedies for a breach of contract

A number of legal actions can be taken following a breach of contract dispute and the following remedies are typically applied. 

Specific performance: This is an order that requires the defaulting party to perform their obligations under the contract. It is typically used when the subject matter of the contract is unique, such as land or construction work. 

Injunctions: An injunction is a court order that prohibits a party from doing something or requires them to do something. This can be used to prevent a party from repeating a breach of contract or to require a party to perform their obligations under the contract. 

Claiming damages: Damages is an award of money that is intended to compensate the injured party for the losses they have suffered as a result of the breach. Damages are intended to put the injured party in the position they would have been in if the contract had been performed.

It is also possible to seek an amicable settlement or Alternative Dispute Resolution (ADR) methods, such as mediation or arbitration, before going to court.

Defences to a breach of contract

Defences to a breach of contract allow a party accused of breaching a contract to argue why they should not be held liable. Successfully raising a defence may excuse or justify their non-performance. This can limit or eliminate their liability. Here are some common defences:

Misrepresentation: If a party entered into a contract based on a false representation of a material fact by the other party, they may claim the contract is voidable. Misrepresentation can be classified as innocent, negligent, or fraudulent.

Mistake: In UK law, a contract can be invalidated if the parties involved shared a fundamental misunderstanding (common mistake) about a core aspect of the contract, making it impossible to fulfil. A unilateral mistake (where only one party was mistaken) may also be a defence if the other party knew or ought to have known of the error.

Duress and undue influence: If a party was coerced or subjected to undue influence to enter into the contract, they may have grounds to invalidate it. Duress involves threats of harm or other pressures, while undue influence typically involves taking advantage of a position of power or trust.

Frustration: Under UK law, frustration applies when an unforeseen event occurs after the formation of the contract that makes performance impossible or illegal. Frustration leads to the automatic termination of the contract, releasing both parties from further obligations. Typical examples include the destruction of a subject matter, changes in law, or events like natural disasters.

Illegality: A contract will be unenforceable if its performance involves illegal acts or violates public policy. This can include contracts related to activities made illegal by a change in law after the contract’s formation.

Capacity: If a party lacks the capacity to enter into a contract (e.g., due to age or mental incapacity), the contract may be deemed voidable at that party’s discretion.

Prior breach: If the other party breached the contract first, the accused party may claim that they are no longer obligated to fulfil their contractual duties. This defence can be raised if the initial breach was significant enough to release the accused party from performance.

How can our panel of contract lawyers assist?

The contract lawyers on our panel understand how to deal with contract disputes and would be more than happy to assist on your case. Our panel of solicitors have many years of experience in dealing with breach of contract matters. If you are looking for legal advice on defences to a breach of contract, please get in touch today.

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