What Amounts to a Breach of a Written Contract

Put simply, a breach of contract happens when one party fails or refuses to perform what it is required to do under the contract.

To establish a breach, it must be shown that there was an unambiguous obligation in the contract to perform.

The language used in the contract will be scrutinised by a judge in determining what was actually agreed between the parties. Vague clauses will not assist.

Binding Obligation

To find a breach by a party, the contract must clearly state that one party is committed to performing a certain action. For instance, a clause might state that X was to pay Y a certain amount of money by a specified date. Failure to pay that by the specified date would constitute a breach. A party could seek more time, but that would need an amendment to the contract to cater for that change of terms.

A contract may have several terms, some minor, some major. A minor breach mat not generally be sufficient to initiate successful legal proceedings for breach. Whereas a fundamental breach would.

In the case of a fundamental breach, the innocent party, can accept the breach, treat the contract as terminated and claim damages for the breach. Alternatively, the innocent party could negotiate fresh terms by agreement but insist on delivery by the other party under the threat of legal proceedings.

Defences to Breach of Contract

Impossibility to Perform: This arises where something occurs which is outside the control of the party. An example could be where goods warehoused are destroyed in a fire.

Force Majeure: This is a common clause in a contract where the party is relieved of their obligation due to extraordinary events like natural disasters or events like COVID.

Other defences that could be cited are:

·      Mistake – where a genuine misunderstanding occurred between the parties.

·      Misrepresentation or Fraud – where the other party was less than honest or made dishonest statements in entering the contract.

·      Duress – the contract was agreed under threats or undue pressure.

·      Capacity - a party was a minor.

·      Statute of Limitations – the claim for the breach is outside the 6-year limit.

To plead a breach in court there are three basic requirements: (a) a valid contract existed (b) there was a material breach and (c) damages are an appropriate remedy.

Cases will depend on the complexity of the issues involved. Always consult your solicitor before (i) entering contracts (ii) discussing the merits of whether a breach has occurred and (iii) defending or suing for breach.