Direct Access Barrister

Disputes & Advocacy

Breach of contract disputes

Most commercial disputes come down to a contract and a disappointment: work not done, goods not delivered, invoices not paid, a promise not kept. Whether you have a claim — and whether it is worth pursuing — turns on three questions the law asks in order: what did the contract require, was it broken, and what can you recover. This note walks through them in plain terms, and through the step that decides everything: whether bringing the claim makes commercial sense. It is general information, not advice on your dispute.

A contract does not have to be a signed document. It forms when there is offer, acceptance, an intention to be bound and something given by each side (‘consideration’) — which can happen by email, over the phone, or through a course of dealing. The harder question is usually not whether a contract exists but what its terms were:

• —Express terms — what was actually agreed, in writing or words. A signed contract with an ‘entire agreement’ clause largely shuts out everything said around it.
• —Implied terms — what the law reads in even where nothing was said: that services will be carried out with reasonable care and skill, goods will be of satisfactory quality, and so on.
• —The small print that bites — limitation and exclusion clauses, notice requirements and time limits often decide the outcome before the merits are even reached.

Not every breach lets you walk away. English law sorts terms by how important they are, and the type of term breached decides your options:

The critical concept is repudiatory breach — a breach serious enough (or a refusal to perform at all) that it lets the innocent party treat the contract as at an end. Faced with one you have a choice to make, and make carefully: affirm the contract and hold the other side to it, or accept the repudiation, terminate and sue. Choose wrongly — terminate when you were not entitled to — and you become the party in breach. This is the moment where early advice most often changes the outcome.

Damages for breach of contract aim to put you, so far as money can, in the position you would have been in had the contract been performed — your lost bargain, not merely your wasted costs. But recovery is bounded by several rules:

• —Remoteness — you recover losses that arise naturally from the breach, or that both parties would have had in mind as likely when they contracted. Unusual losses must have been foreseeable.
• —Mitigation — you must take reasonable steps to reduce your loss. You cannot let the damage run up and send the bill to the other side.
• —Liquidated damages — a genuine pre-agreed figure for breach is enforceable; a sum set purely to frighten (a ‘penalty’) is not.
• —Beyond damages — in the right case: an order for the price, specific performance (compelling performance where damages will not do), an injunction, and interest.

Litigation is the last step, not the first, and the courts expect you to have behaved accordingly:

This note is general information about breach of contract disputes in England and Wales and does not constitute advice on a particular dispute. Contract claims turn on their precise terms and facts, and time limits apply; take advice early.