Key Takeaways
- To succeed in a breach of contract claim, you need to show that a valid contract existed, that it was breached, and that you suffered a loss as a result.
- There are different types of breach, from minor breaches (where you can claim damages but not end the contract) to repudiatory breaches (which entitle you to treat the contract as terminated).
- The main remedy is damages. This is a financial sum designed to put you in the position you would have been in had the contract been performed.
- Before issuing court proceedings, you must send a formal Letter Before Action giving the other party an opportunity to settle.
- The time limit for bringing a breach of contract claim is generally six years from the date of the breach.
- Specific performance and injunctions are available as alternative remedies in certain cases.
When one party to a contract fails to perform their obligations, the other party may have a right to bring a legal claim for breach of contract. Whether the contract is for services, goods, property or something else entirely, the law provides clear remedies. However, those remedies need to be pursued correctly and within the applicable time limits.
This guide explains what you need to prove, how to approach a claim, what remedies may be available, and when taking legal advice is essential.
What Is a Breach of Contract?
A breach of contract occurs when one party to a legally binding agreement fails to fulfil their obligations under it. That could be by failing to perform at all, performing defectively or performing late. Additionally, the breach may be of an express term (something clearly written into the agreement) or an implied term (one that the law reads into the contract).
Breaches fall into two broad categories:
- A minor or partial breach is where one term has been broken but the contract has substantially been performed. In this situation you can claim damages but cannot treat the contract as at an end.
- A repudiatory breach is one so serious that it goes to the root of the contract, entitling the innocent party to accept the breach, treat the contract as terminated and claim damages.
Anticipatory breach is a third category. This is where one party makes clear before the performance date that they will not be honouring the agreement. In these circumstances, the innocent party doesn’t have to wait for the breach to actually occur. They can accept the anticipatory breach immediately and bring a claim.
What Do You Need to Prove?
To succeed in a breach of contract claim in England and Wales, you need to establish three things on the balance of probabilities.
- A valid contract existed: This requires an offer, acceptance, consideration (something of value exchanged by each party) and an intention to create legal relations. A contract doesn’t need to be in writing to be enforceable, though written contracts are far easier to prove.
- The contract was breached: You must identify the specific term or obligation that was not performed and show how the other party failed to meet it.
- You suffered a loss as a result: Damages are compensatory, not punitive. You must be able to show actual loss flowing from the breach, not merely a technical failure with no practical consequence.
Steps Before Issuing a Claim
Step 1: Gather Your Evidence
Before doing anything else, pull together all the relevant documents:
- The contract itself (or evidence of its terms)
- Correspondence
- Invoices
- Delivery records
- Photographs
- Any records of the loss you have suffered
The strength of a breach of contract claim almost always depends on documentary evidence.
Step 2: Send a Letter Before Action
Before issuing court proceedings, you are required under the Pre-Action Protocol for Debt Claims (and the general spirit of the Civil Procedure Rules) to send a formal Letter Before Action (LBA). This sets out the nature of the breach, the loss suffered, the sum you are claiming and a deadline (typically 14 to 30 days) for the other party to respond or settle.
Courts expect parties to attempt to resolve disputes before litigation. A well-drafted LBA often prompts settlement. If not, it demonstrates to the court that you acted reasonably before issuing proceedings.
Step 3: Consider Alternative Dispute Resolution
Mediation and other forms of alternative dispute resolution (ADR) can resolve contract disputes more quickly and cheaply than litigation. Courts may penalise a party in costs if they unreasonably refused to engage in ADR. Even where settlement isn’t ultimately achieved, the process can help narrow the issues.
Issuing a Court Claim
If the LBA doesn’t produce a resolution, the next step is to issue proceedings in the County Court. Claims up to £10,000 are usually allocated to the small claims track, where the process is designed to be accessible and costs recovery is limited. Claims between £10,000 and £25,000 go to the fast track. Higher-value or more complex claims go to the multi-track, where specialist legal representation is important.
For straightforward money claims, the Money Claim Online (MCOL) service allows claims to be issued through the court’s online portal. For more complex contract disputes, proceedings are usually issued by filing a claim form at court, accompanied by Particulars of Claim setting out the legal basis for the action.
Remedies for Breach of Contract
Damages
The primary remedy for breach of contract is damages. That’s a sum of money designed to put the innocent party in the position they would have been in had the contract been properly performed. Damages are compensatory, not punitive. So, courts won’t award extra sums to punish the defaulting party.
To recover damages, you need to show that the loss was caused by the breach and wasn’t too remote. Essentially, the type of loss must have been reasonably foreseeable at the time the contract was made. You also have a duty to mitigate your loss. In other words, you can’t just let losses mount if reasonable steps could be taken to reduce them.
Specific Performance
In some cases, particularly property transactions, damages aren’t an adequate remedy because the subject matter is unique. For this, a court can order specific performance, which compels the defaulting party to carry out their contractual obligations. This remedy is discretionary and not available in all circumstances.
Injunctions
Where a party is threatening to breach a contract or is in continuing breach, it might be possible to seek an injunction preventing them from doing so. Injunctions can be granted on an urgent basis where delay would cause irreparable harm.
The Six-Year Time Limit
Under the Limitation Act 1980, a claim for breach of a simple contract must generally be brought within six years of the date the breach occurred. For contracts made by deed, the limitation period is 12 years.
Missing the limitation period will almost certainly be fatal to the claim. In short, the defendant can apply to have it struck out. So, acting promptly once a breach is identified is essential.
Speak to a Commercial Litigation Solicitor Today
Osbourne Pinner’s commercial litigation team advises individuals and businesses across London and Harrow on breach of contract disputes of all sizes. Our work spans from straightforward debt recovery through to complex multi-party commercial disputes. We advise on the merits of a claim, draft Letters Before Action, negotiate settlements and, where necessary, represent clients in court.
Please note that this article is for informational purposes only and does not constitute legal advice. We always recommend speaking to a qualified solicitor for advice tailored to your specific circumstances.
If you believe a contract has been breached and want to understand your options, speak to us promptly.
We offer a free 30-minute consultation to discuss your situation. You can speak with us via video call or visit our offices in Harrow, Canary Wharf, Piccadilly Circus or Manchester. To arrange your consultation, call 0203 983 5080, email [email protected] or complete the form below.
