When you are running a successful business, it is only natural that you sign dozens of contracts at regular intervals. Perhaps you have never experienced anything going wrong with these contracts. But, have you ever completed the consequences if, and, when things do go wrong with your contracts. Shrewd business owners always have a competent business dispute lawyer or a house of business lawyers Melbourne on their side to effectively handle any such eventualities. Once a contract is put in place, both parties are expected to abide by the terms and conditions enshrined in the contract. But, in practice, this may not happen at all times either by intent or due to force majeure conditions. If your contract does not have a force majeure clause, the other party may still be liable if a breach of contract occurs.
To illustrate breach of contract, let us consider your contract with a developer to provide a component for an out of the world app that you are creating. The time limit to complete the task is agreed upon as 3 months. Even at the end of 3 months, the developer is not parting with the deliverable as agreed upon in the contract and is only giving lame excuses. You have at stake several thousand dollars and without that particular component stand to lose all the money you have put in, apart from attracting more damages and legal consequences from your client. This is a fit instance that allows you to sue the developer for breach of contract.
Before proceeding with litigation for breach of contract, you should also know that most parts of our legal framework, narration, and language are drawn from English law. Business lawyers Melbourne or a business dispute lawyer can help you come to grips with the legal language and its import on the issue you have on hand. When you are suing for breach of contract, the following 3 aspects would be examined:
- When the breach of contract occurred
- What you can recover in terms of the contract
- How you should proceed
In the 21st century dictated by the digital world, we are seeing more and more breach of contract disputes arising from a wide array of causes. This trend is also likely to hurt SMEs more in particular and they should therefore invest more time and perhaps little money to know their rights, potential remedies, and legal options when faced with disputes.
What is a breach of contract?
When the terms of a contract are broken by one or more parties to that contract, a breach of contract has occurred. This will also include obligations in relation to time enshrined in the contract such as late payment of rent, tenant vacating a premise with rent in arrears for several months, an employee terminating a contract before the end of the contracted period, delays in execution of contracted work in multiple areas, etc. Some contacts may include a specific clause detailing the manner in which a breach of contract should be dealt with. When treatment for a specific violation does not figure in the contract, the parties to the contract may be left to settle the issue among themselves leading to adjudication, a new contract, or any other kind of resolution.
Before initiating legal measures, you should establish a breach of contract with reasonable certainty. Failure by any party to a contract to fulfill terms of the contract without a legally tenable excuse is reckoned as a breach of contract. You should also know that every contract does not stand on the same footing. Under English law, when an essential component of the contract that is necessary for the continuance of the contract is breached, repudiation of the contract may be automatic and the contract will cease to be in force. However, non-essential terms known as warranties may not invite repudiation even when breached though the claimant may be entitled to damages.
Businesses may lease premises to run their business and a lease agreement between the tenant and the landlord will constitute a contract for the purpose of initiating action when the terms enshrined in the lease agreement are breached. This can relate to the period of the lease, rent falling in arrears, alterations in the premises made without the written consent of the landlord, etc. A commercial lease dispute lawyer can be of help in dealing with breach of contract related to leases.
Forms of breach
English law also sets out two distinct forms of breach anticipatory breach and actual breach. An anticipatory breach occurs even before the agreed performance falls due either because it is no more practically possible to perform or attracts repudiation. The actual breach is pretty straightforward as explained above and in instances like failure to deliver a product or service within the agreed-upon time frame.
Remedies available when a breach of contract affects you
English law divides remedies available against a breach of contract under two categories broadly and these are alternative remedies and damages. Damages refer to monetary compensation towards loss arising out of the breach and can operate in two ways. One is the measure of expectation which places the claimant in a position where he would have been if the contract had been carried out. On the other hand, the reliance measure puts the claimant in a position where a contract was never in existence. Which approach works best for you will depend on the specifics in each instance of a breach of contract. Solicitors will generally take into account the amount of work that has already been accomplished by the erring party versus the financial damage you have suffered waiting for the service/product to be delivered. While alternative remedies are rarely pursued, you should also remember provisions under the specific performance of a contract. Alternative remedies can compel the party causing the breach to complete the contract and can be particularly helpful in contracts that involve special objects whose value may be difficult to quantify.
Considering that most business persons have little or no knowledge of the legal intricacies, and disputes are not avoidable, it is always beneficial to consult a competent business dispute lawyer.