It will also be expected that you have taken reasonable steps to ‘mitigate your losses’ to reduce the impact of the breach of contract. Prove that you suffered a loss as a result – The innocent party must prove there was a loss because of the breach and this loss requires compensation.Prove that the other party did not perform their part of the contract – The terms and conditions of the contract need to be clarified and compared to what actually took place.Prove that there was a contract in existence – It would need to be proven that a legally binding contract was in place and that it had been breached. These clauses are often found in manufacturing and building contracts, which often include set charges for late completion of work. You will be entitled to ‘liquidated damages’ if the contract specifies that an amount should be paid if one side breaks the contract. Damagesĭamages are used to put the claimant back in the position they would have been in if the terms of the contract had been met as agreed. If the breach of contract is a breach of a warranty, compensation is by damages alone. If a condition of your contract has been breached, you may be able to terminate the contract by ‘repudiation’ and claim compensation for the loss you have suffered. What are the remedies for a breach of contract? Repudiation This type of breach is one where a party expressly communicates that they will not be carrying out a term or condition of the contract. For example, if a manufacturer were to fail to produce and supply goods that had been ordered the innocent party would have to terminate the contract. A fundamental breach of contractĪ fundamental or repudiatory breach of contract (see repudiation below) is where the severity is such that the contract can be terminated instead of the innocent party seeking damages. For example, a manufacturer substitutes a specified part (within the contract) for a different part that is of lesser quality and will not last as long as the part specified within the contract. A material breach of contractĪ material breach of contract is where the breach has serious consequences on the viability of the goods or services supplied where a party would not have entered into the contract if they could not have guaranteed this term. A minor breach of contractĪ minor (or partial) breach of contract is where, for example, a manufacturer substitutes a part (specified within the contract) for a different part that may work just as well. The breaches in contract normally fall into any of four categories: minor, material, fundamental (repudiatory), and anticipatory.
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