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How to deal with breach of contract - remedies and risks



Sun 31 December 2023 How to deal with breach of contract - remedies and risks

A contract is a binding agreement between two or more parties outlining respective rights and obligations. When one party fails to fulfill their contractual duties, this is a breach of contract, potentially leading to legal consequences.

It is always important to check the terms of any written agreement in place. Many contracts have clear provisions about the consequences of specific breaches and often also include processes to be followed in the event of breach.

 It is entirely possible to have a situation where 1 party is in breach of contract but the other party then responds in the wrong way and ends up in breach of contract themselves.

Types of breach of contract

Remedies for breach of contract

English law approach to damages

In English law, the purpose of damages is to put the innocent party in the same position they would have been in if the contract had been properly performed. The injured party must demonstrate a clear causal link between the breach and the loss suffered. Damages can only be awarded for losses that directly stemmed from the breach.

This often involves calculating the difference between the value of the promised performance and the actual value received.

In some cases where the expectation measure does not adequately compensate the injured party, the reliance measure can be used. This measures the wasted expenditure incurred by the innocent party in reliance on the contract being performed.

The injured party has a duty to take reasonable steps to minimise their losses, this is known as mitigation of loss. Failure to do so may reduce the amount of damages awarded.

Legal and Practical Considerations with breach of contract

Every breach of contract situation is unique, and the most suitable approach will depend on the specific circumstances. Early action, strong evidence, and seeking legal guidance can significantly impact the outcome of the situation.

Please do get in contact to discuss your contract breach situation and how we can help.


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