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Common Contract Breaches

A contract is formed when parties reach an agreement and terms, either in writing or verbally, and commit to form that legal relationship and pay a consideration.

Once the contract is formed mostly things progress smoothly until a dispute arises or a person or party breaches the contract.

There are different types of breaches and may can be sorted out amicably between the parties. However, when this cannot be done you may need to obtain legal advice to assist in resolving the dispute or to seek damages or enforce the contract.

Mostly breaches by one party occurs for the various reasons, including:

  • Does not perform in the prescribed time in the contract;
  • Does not perform their duties as stated in terms of the contract; or
  • Fails to perform their duties.

There are different categories of contract breaches:

Minor Breach

This is also referred to as a partial breach and is where the terms of the agreement have only been partly satisfied or delivered on. In most instances the parties would try to make good or fix the remedy and many disputes where they have suffered a financial loss due to the breach. If the party has not fulfilled their obligation then they would claim the loss from the other side.
An example of a minor breach would be where some defective work is done on a building project or where a supplier of goods has not supplied all the goods or there are missing parts from the delivery.

Remedies for minor breaches would be for the other party to agree to fix the issue. This could extend to financial compensation if a party has suffered financial loss due to the contact breach.

Material Breach

A material breach is more significant and to be a material breach there has to be a key element of the contract that hasn’t been delivered or performed. As a consequence, one party is deprived of the benefit of the contract. The breach must cause a significant or serious effect on the benefit that one party would receive.

If a material breach has occurred you could seek a variety of remedies or make good options to settle the dispute. This is a more significant type of breach and a party may be able to terminate the contract due to the breach. Again, if financial loss is incurred, as it most certainly would have, the other party could seek compensation and damages for their loss.

Anticipatory Breach

An anticipatory breach is a breach that has not yet occurred, but where one party has notified the other that they won’t fulfill their obligations under the contract. It may also be where one party does not intend or be able to fulfil their obligations under the contract.

Actual Breach of Contract

An actual breach of contract is where the breach has occurred where one party has not performed their part of the contract. This could be where goods are not delivered or unsatisfactory work being performed.

What remedies are there for contract breaches?

You may wish firstly to end the contract and stop losses from occurring.

Dispute Resolution

Some consumer law based contracts such as building contracts have prescribed procedures to resolve disputes between the parties. Other business contracts do not so other methods have to be used.

Terminating a contract

A contract can be terminated due to breaches, being discharged or repudiation. To terminate a contract is not always simple and the correct procedure should be followed to ensure that you as the aggrieved party does not become liable for losses or claims from the other party.

Specific Performance

Specific performance is where a court order is sought force the party to complete or perform a part of the contract. This can be sought urgently through a court process and can be helpful to a Plaintiff in making sure the contract is performed. This can lead to a better commercial outcome rather than simply ending a contract (which is usually another option) on the basis of the breach.

Renegotiating the Terms of the Contract

The parties may agree to amend the terms of the contract through negotiation to satisfy all the parties. This can be done without going to court. This may help to retain the relationship between all the parties where the commercial arrangement can continue to benefit all the parties.

Damages

If you are seeking damages you will need to be able to ascertain your loss. This process is generally more litigious but may not end up in court and can be settled early through correspondence and mediation.

 

Strategies to Resolve Contract Disputes and Breaches

If you are involved in a dispute there are many ways that a contract lawyer can assist you in resolving the contract breach dispute.

There are different types of strategies that can be employed to resolve the contract dispute in a commercially minded way.

Typically, people who enter into a contract want the arrangement to work and to the benefit of both parties. So, you may want or be required to continue the relationship. Having a lawyer who understands the commercial realities as well as the legal side can help you resolve the matter that will ultimately benefit you as our client.

Other may seek to terminate the contract and seek damages. This may not be possible for all contract breaches and we will advise you so that you can make the best commercial decision.

Whatever your desired outcome is, we will work towards it.  Mostly disputes can be resolved quickly and with proper legal representation this process will happen faster. We provide our clients with concise advice and work effectively to get the best result for our clients in fastest time frame.

Contact us to speak to a contract lawyer today about your query on 1300 907 335 or complete an online enquiry form and we will get back to you promptly.

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