Breach and Remedy of Contracts
In this series, James Spargo Litigation Executive (BA Hons, GCILEx) will look at the very basics of contracts. The Specters team are always happy to provide advice on all types of contracts.
Often when we think of contracts, we think of lengthy documents in small print full of legal jargon. However, a contract can be as simple as exchanging money for a packet of mints in a corner shop. In such a case, you don’t even need to say anything to the shopkeeper, the mere fact of the exchange of goods for money is enough for a contract to be formed. This is an example of a contract by conduct, but contracts can also be verbal and written.
A breach of contract occurs when one party to the contract does not keep to their side of the bargain and the remedies available depend on how serious the breach is; the most serious breaches affect the essential nature of the contract.
There may be occasions where the other party completely fails to uphold their end of the contract. An example of this would be where you make a contract to buy 10kg of oranges and the supplier fails to deliver them.
There can also be a partial failure, where you make a contract to buy 10kg of oranges, but the supplier only deliver 5kg.
There could also be a situation where you agree to buy 10kg of one particular type of orange, but the supplier deliver 10kg of another type of orange.
Remedies for serious breaches
In this case, would be entitled to treat the contract as at an end; this is known as repudiation. If you repudiate a contract, then you do not have to keep your part of the contract and you are also entitled to claim damages.
The purpose for damages for breach of contract is to put you in the position you would have been in had the contract been properly performed.
As an example, you agree to buy oranges for £5 per kg and the other party fails to deliver so you have to look elsewhere for your oranges. You advise the seller that you repudiate the contract, so you do not then have to pay the seller or perform any other part of the contract. You then find that you are able to buy oranges elsewhere for £6 per kg. In this case, your damages would be the extra £1 per kg that you had to pay.
In some cases you may decide that you do not want to repudiate the contract and want to insist that the other party sticks to their part of the contract. This may be the case when you are buying something like a unique diamond ring as opposed to something like oranges. You can ask the Court to make an order that the other party complies with their part of the contract and you can also claim damages.
Less serious breaches
There may also be problems that are technically a breach of the contract, but much less serious. For example, if the contract specifies that the organes should be delivered in a wooden crate but instead are delivered in a sack.
Although this is technically a breach of the contract, if there is nothing wrong with the oranges, then the contract has still been performed and you would not have the right to repudiate. You would still have the right to claim damages, but a Court would be very unlikely to award any more than a very small sum.
Except in very rare circumstances and unlike for example the USA, the Courts do not award damages to punish the other party for their behaviour, so you will only be able to claim damages that reflect the actual loss that you have suffered.