Breach of contract: what is it?

With a fracture, your leg is broken. With a break-up, your relationship is broken. And with a fraction, a whole number has been broken into parts. What do all these examples have in common? They were once meant to be whole, and now they are not.

With a breach of contract it is much the same. Where two parties conclude an agreement, the intention is that what they have agreed is performed in full. But sometimes a contracting party does not keep to the bargain. In that case we speak of a breach of contract. What exactly is a breach of contract, and what options does the other party have when it happens?

When is there a breach of contract?

In a contract the parties record the arrangements they want to make. How you record them is up to you. That can be on paper, orally, or even on a beer mat. If the other party then fails to keep to what was agreed, there is a breach of contract. In legal terms this is called a failure to perform.

Examples of a breach of contract are: failing to pay an agreed price, paying late or paying in part; failing to deliver a particular product or service; or otherwise failing to perform properly.

Suppose this happens to you as a contracting party. That does not leave you empty-handed, because contract law offers a number of remedies you can reach for in order to act against a breach. A number of options are set out below.

What can you do about a breach of contract?

A promise is a promise, so in the first place you always have the option of requesting or claiming performance. Performance means that the debtor, meaning the party owing the obligation that has not been met, is asked to perform after all, in the agreed manner. Usually a notice of default is sent first, giving the debtor a final period in which to perform.

Another option, where the debtor does not perform or does not perform in time, is to suspend your own obligations. That means you postpone performing your own side until the debtor performs after all.

Finally, you can also terminate the agreement or have it set aside. In both cases the agreement ceases to bind the parties, but note that the law would not be the law if there were no conditions attached. Termination requires a failure to perform serious enough to justify it. Setting an agreement aside requires a defect in consent, such as fraud, mistake, abuse of circumstances or duress. And if you have also suffered loss because the debtor did not perform, or did not perform in time, you have the further option of claiming damages.

Get in touch about a breach of contract

The starting point is that a breach of contract is not permitted, but situations are conceivable in which the debtor had no choice. Force majeure, for instance. Do you need legal help? Get in touch for a no-obligation consultation.