Once you agree to a business contract, you’re obliged to carry out the specific obligations or else risk legal problems. Should any of the parties involved in the contract go against the agreed-upon terms, that’s referred to as a breach of contract. This breach of contract can happen when one of the parties is not performing their roles as stated in the contract or failing to do anything altogether. It can also come about by one party not completing their duties within the required timeframe.
The party who breaches the agreed-upon terms of the contract usually has to deal with legal consequences. Therefore, it’s important to always adhere to the terms of the contract and avoid this altogether.
Breach Of Contract Examples
What Are the Different Types of Breach Of Contract?
While there are various kinds of contract breaches, all of them arise when one party doesn’t adhere to their legal responsibilities as earlier agreed upon in the document. The main types of breach of contract you should know about include;
The fundamental breach of contract is considered the most serious kind of contract breach. When it happens, you can take legal actions against the person who has violated the terms of your contract. You can also choose to end the contract due to a fundamental breach of contract. To help you get a better idea of this breach, we’ll illustrate using an example.
For example, after signing a lease agreement with a landlord, you’re the only one allowed to use the venue. But if the landlord all over a sudden decides to allow someone else to use the booked venue, then they’ve violated the agreed-upon contract. This is considered a fundamental breach of the lease contract. Therefore, it’s within your legal rights to sue the landlord and have them evict the other party for you to use the venue.
This kind of breach of contract happens when a particular party accuses the other of going against the agreement even before even the breach occurs. For anticipatory breach of contract, one party is clearly showing signs of not enforcing their end of the deal within the agreed-upon duration. As a result, the other party goes ahead and files for anticipatory breach of contract before the violation even happens.
For example, assume you hire a contractor to complete a certain project within three months. But when the deadline is fast approaching, the contractor either hasn’t started or is yet to reach halfway. Should this happen, you can accuse the contractor of breach of contract and sue them to be compensated for the time wasted and money already spent.
This type of contract breach occurs due to a particle violation of the terms of the agreement. For instance, after hiring a consultant to build the company’s site. While the project gets completed on time, you later realize that there are a couple of issues. In this situation, you can’t file a contract breach against the consultant for violating the agreement. However, you’ll need to file and request either monetary damages or correction of the mistakes.
This is another serious contract breach and happens when either party in the agreement fails to do what’s expected of them. When this party infringes on a serious clause in the agreement, it’s within your legal confines to sue them for damages.
For example, as a consultant, you expect payment for services rendered once you complete your project. But if this doesn’t happen, you can proceed and sue your client for material breach of contract. The reason for doing this is to make sure you get your deserved payment which the client is delaying to process.
Breach Of Contract Letters
When Should You Use the Contract Breach Document Or Notice?
The breach of contract form or breach of contract letter instructs an individual they aren’t following the terms laid down in their contract. In some cases, you’ll be expected to clear the manner in which the other party is going against their duties. Other contracts have clauses that require you to inform the other party each time they go against the terms laid out in the contract letter.
Thanks to the breach of contract letter or form, you get to confirm situations ensuring each party sticks to the agreed boundaries of the contract. The situations when you should consider using this form include;
- You’ve entered into a contract or agreement with an individual that isn’t performing their duties well as outlined in the document’s terms.
- Your company often deals with contracts and agreements.
Usually, nobody enters into an agreement or contract intending to perform a breach. However, it sometimes inevitably does happen regardless of how much planning has been put in place. When this happens, it’s within your legal rights to give notice to the other party that’s responsible for the mistake. Contained in these contracts are terms and conditions that should be adhered to by both parties.
Giving the other party notice is an essential step for remedying a possible problem that’s been brought about by the breach of contract or agreement. And while this notice might not be of significant help, it does help a great deal in ensuring your legal rights are protected later in the future. While creating the breach of contract letter, it’s advisable to clearly outline how the other party hasn’t accomplished their obligations as outlined in the contract.
What Are the Parts Contained In The Breach Of Contract Letter?
The first step before taking legal action against the other party due to breach of agreement is to write a letter detailing everything on this breach. This kind of letter contains every detail on your claim and serves as the “opening act” during numerous legal proceedings. In addition, it’s a very affordable way of resolving conflicts and disagreements.
As you draft this letter, there are a few things that you should include, such as;
- Details on the breach of contract: This involves instructing the breaching party to think of a remedy for the contract breach within a certain duration, usually 14 days.
- The interest claims: You can also choose to charge interest on the amount which is payable to you. If this is the case, you need to include such details together with the pertinent interest rate state in the contract or provided by the Court Service.
- Adhering to the procedure for pre-action: These protocols are the guidelines set within which both parties should act or what they need to do before taking legal action. Before issuing this letter, first, confirm to adhere to the pre-action protocols or risk suffering penalties.
- Your claims: This clearly highlights every single detail you’ve arrived at in your contract, as well as the considerations made when entering into this contract. It also explains the contract breach alongside the damages or losses suffered as a result.
- Further legal action: This emphasizes the other party is not taking any action to try and find a solution to the contract breach. The lack of any action is what has led to you taking further action against this other party.
Breach Of Contract Forms
Proving Breach Of Contract
Before commencing any contract breach, there are several things you should do when starting each of your legal argument and this include;
- The contract’s existence
- The proof of the other party breaking the contract
- The fact you suffered losses or damages
- A statement that the losses and damages suffered were caused by the other party
How Should You Remedy A Contract Breach?
There are several steps the party that’s violated the contract should take to resolve the situation. Without doing so, they might end up having to contend with legal consequences. The most common remedies for contract breach are;
The party that went against the contract is required to pay damages which can be in various forms. These different kinds of damages include;
- Normal damages: These are token damages that the party hasn’t broken their contract, and this usually happens when there is no money lost.
- Compensatory damages: This happens when the non-breaching party is placed in such a position before the breach happens.
- Liquidated damages: These damages are identified by parties within the contract after the contract gets broken by either of them.
- Punitive damages: These are the payments that need to be made by the breaching party until they’ve entirely compensated the non-breaching party.
Should the non-breaching party feel damages, don’t offer them their desired solution. This is an alternative remedy they might consider. The specific performance describes the performance of the breaching party according to the orders made by the court of duty as highlighted in the agreement.
If the breach subject matter is rare or unique and the damages don’t provide enough remedy, then this is a viable option.
Restitution and Cancellation
The non-breaching party may terminate or cancel the contract and, after that, sue the party violating the contract for restitution. This kind of remedy happens after the non-breaching party is placed in a position they were in even before the contract breach happened.