Depending on what the breach is, and whether the breach has occurred or is simply anticipated, this will impact the type of ‘remedy’ which is available. Here we consider some of the more common remedies which may be available to an innocent party.
The starting point for any breach / anticipated breach will be to consider the contract and which options are available under it (although with oral agreements this may not be possible as these things may not have been discussed).
Some contracts will include specific clauses which come into operation in the event of a particular breach – say for example: If X does not deliver [something] on the specific date, then they will pay £5,000 per day until it is received.
Alternatively, there may be a force majeure clause and depending on what has caused the breach this could allow the parties to either suspend or terminate the contract.
They may also have a specific dispute resolution mechanism such as an arbitration, adjudication or mediation clause, or may require a party to notify a defaulting party of termination by a certain method and in the absence of compliance this could compromise the innocent party’s position.
Most parties will have entered into an agreement because they want the other party to do / not do something.
If it is still suitable to compel a party to comply with their contractual obligations, and there remains time for compliance, then a party may be able to ask the Court for an Order for Specific Performance to ensure those contractual obligations are met.
Depending upon which type of term is breached, a party may be able to argue that a contract as been ‘repudiated’ and treat the contract as terminated.
Often, when a breach which gives rise to repudiation, ‘part-performance’ will have taken place meaning that one or both of the parties will have already undertaken some of their contractual obligations and will require the defaulting party to put them back in the position as if the contract had never existed.
Damages / Restitution
Where a breach has occurred, most commonly an innocent party will want to seek a claim against the defaulting party for any financial losses which they have suffered.
This could be anything from seeking payment for an outstanding invoice, to remuneration for any part-performance, or losses they have sustained from being unable to perform an on-going connected contract.
Sometimes a contract will have mechanisms relating to interest payments and enforcement costs indemnities, or damages arising from a termination (although parties will need to be aware of arguably penalty clauses, unfair terms or unlawful clauses). For those without a default interest provision, they may look to rely on the Late Payment of Commercial Debts (Interest) Act 1998.
Contact our Solicitors
Whether you are looking to recover money, goods, compel a party to comply with a contractual obligation, defend against allegations of breach of contract, or are seeking to extract yourself from a contract you now cannot comply with, Bishop & Sewell have a team of lawyers able to advise you on the options which are available to you.