Being threatened with or receiving a breach of contract claim does not necessarily mean you have to accept liability or pay the amount demanded. There may be a complete defence, arguments which significantly reduce the value of the claim, or grounds for a counterclaim against the claimant.
Just as importantly, successfully defending commercial litigation is often about tactics as much as the underlying legal arguments. A well-timed counterclaim, settlement offer, request for information or court application can change the balance of a dispute and put significant pressure on the claimant.
At Taylor Rose, our commercial litigation solicitors defend businesses, directors, shareholders and individuals against contractual claims, from the first Letter Before Claim through settlement negotiations and court proceedings.
What defences are available to a breach of contract claim?
There is no standard defence. We start with the contract, the evidence and what actually happened between the parties.
Potential defences include:
No breach – you may have complied with the contract or the claimant may be interpreting your obligations incorrectly.
The claimant breached first – the claimant's own failure to perform may provide a defence and potentially a counterclaim.
Waiver – the claimant may, through its words or conduct, have given up or chosen not to enforce a particular right.
Variation – the parties may subsequently have agreed different terms, deadlines, specifications or payment arrangements.
Estoppel – the claimant's previous representations or conduct may, in appropriate circumstances, prevent it from insisting upon a position inconsistent with how the parties subsequently acted.
Invalid termination – the claimant may have purported to terminate without having the contractual or legal right to do so.
Set-off – sums owed to you by the claimant may potentially be used to reduce or defeat the amount claimed.
Limitation – the claimant may have waited too long to commence proceedings.
Failure to satisfy a contractual condition – the claimant may not have served a required notice, allowed an opportunity to remedy a breach or followed another contractual process.
Misrepresentation – you may have entered the contract because of an actionable false statement.
Mistake, duress or illegality – these are less common but can potentially affect the validity or enforceability of an agreement.
Force majeure or another contractual excuse – the agreement may provide protection where specified events prevented performance.
Exclusion or limitation clauses – the contract may exclude the type of loss claimed or impose a financial cap on liability.
More than one defence may apply.
Other Key Points and Possible Options to Defend a Contract Claim
Counterclaims? – A counterclaim fundamentally alter the dynamics of litigation. A counterclaim should never be manufactured simply to create pressure. It must have a proper legal and evidential basis and pursuing it creates its own costs and risks. However, where a genuine counterclaim exists, identifying it early can be extremely important strategically as well as legally.
Set-off? - may allow sums owed by the claimant to be taken into account against the amount it is claiming from you. For example, if a claimant seeks £200,000 but you have a valid £80,000 claim capable of being set off, your potential net exposure may be very different. Whether set-off is available depends upon the circumstances, the relationship between the competing claims and the contractual terms. Some commercial agreements also contain provisions restricting rights of set-off.
Waiver? – The claimant's conduct after becoming aware of an alleged breach can be crucial. A claimant that knew what was happening and behaved as though the contract would continue may face difficulties later relying upon the same conduct in the way now alleged. The correspondence and behaviour following an alleged breach can therefore be as important as the original contract.
Was the contract subsequently varied? - Commercial relationships rarely operate perfectly according to the document signed at the outset. The question may therefore be whether the obligation relied upon by the claimant was still the contractual obligation when the alleged breach occurred. Evidence can include emails, messages, meeting notes, revised documents and the parties' subsequent conduct.
Challenge the amount being claimed - A claimant still needs to establish that its losses are legally recoverable.
Litigation tactics – defending the claim strategically
A strong defence is not simply a list of legal arguments. Commercial litigation is dynamic, and tactical decisions made during a dispute can materially affect its outcome.
The objective may be to defeat the claim entirely. But it may instead be to reduce its value, obtain a favourable settlement, bring the dispute to an early conclusion or make continued litigation commercially unattractive to the claimant.
Some of the tactical options we consider and are highly experienced in implementing include:
Tactical settlement offers - Settlement offers are not simply something to consider immediately before trial. A carefully judged offer made at the right stage can put pressure on the claimant and create potential costs advantages. The amount, wording and timing of an offer can all matter. For example, a defendant confident that an exaggerated claim will ultimately recover substantially less may consider making an early offer at a realistic level. If the claimant rejects it and performs poorly at trial, that earlier offer may become highly relevant when the court considers costs.
Tactical ourt applications - Sometimes waiting for the case simply to progress towards trial is not the best strategy. Depending on the circumstances, we may consider whether an application should be made to the court, including applications relating to strike out of all or part of a claim which is legally defective, requiring the claimant to provide further information or clarify its pleaded case, disclosure of important documents, security for costs in appropriate circumstances or determination of an issue which could substantially narrow the dispute. Applications have their own costs and risks. The question is therefore not merely whether an application can be made, but whether making it is likely to improve the client's overall position.
Using mediation at the right time - Mediation can be highly effective in contractual disputes, but timing matters.Mediating before the parties understand the evidence may achieve little. Conversely, waiting until immediately before trial may mean substantial costs have already been incurred. We consider when both parties have enough information to evaluate their risks and whether a particular development – such as disclosure, an expert report or a failed application – creates a useful opportunity for settlement.Taylor Rose has helped clients resolve a range of contract breach disputes through mediation, avoiding the cost, delay and uncertainty of a full trial while preserving important business relationships.
Why tactics need to be considered early
Some opportunities can be lost if they are not identified at the outset.
A counterclaim may need investigation and evidence. An insurer may need prompt notification. A potentially decisive document may need preserving. A settlement offer may have much greater value if made before substantial costs accumulate.
Likewise, correspondence written before solicitors become involved can inadvertently contain admissions or undermine arguments that might otherwise have been available.
The strongest defence strategy therefore considers the endgame from the beginning: what outcome you want, what the claim is realistically worth, what leverage you have and which procedural or commercial steps are most likely to achieve that outcome.
Our role is to identify where the claimant is vulnerable, where you have leverage and the most effective way of using it.
If proceedings have already been served, do not ignore them. Court deadlines for acknowledging and defending a claim can be short and failure to respond can result in judgment being entered against you.
How our commercial litigation solicitors can help
A strong defence is about more than responding to allegations. Our commercial litigation solicitors assess the legal merits, financial exposure and tactical opportunities in the dispute, including whether there is scope to turn the tables with a counterclaim.
Examples of recent instructions
Taylor Rose recently defended a well-known cryptocurrency firm against a breach of contract claim brought by a recruitment firm, successfully running a defence and counterclaim which resulted in the firm being awarded indemnity costs.
Taylor Rose recently acted for a care home client defending a £92,000 claim brought by a recruitment agency. Having identified that the largest element of the claim, around £80,000 in termination fees, had no actionable loss, we advised settling the smaller heads while defending the balance through to trial. The claim was dismissed within an hour of trial, and the client was awarded costs with a 50% uplift for the claimant’s unreasonable conduct.
Taylor Rose has successfully settled a multi-million pound claim against a bank for breach of mandate without the need of going to trial, demonstrating our ability to secure strong outcomes in high-value, complex commercial disputes.
