Contracts are part of everyday life. We enter into them when buying goods or services, carrying out work, renting commercial premises, employing people, supplying products or agreeing to undertake work for another person or business.
Most contracts are completed without any difficulty. Occasionally, however, one party fails to do what they agreed to do. Perhaps a contractor does not complete agreed work, a supplier fails to deliver goods, a business refuses to pay an invoice or a customer fails to comply with an important contractual obligation.
When this happens, you may be wondering "Can I sue someone for breach of contract?"
The short answer is that you may be able to bring a civil litigation legal claim, but establishing that a contract has been breached is only the beginning. The nature of the agreement, what actually happened, the financial loss suffered and the terms of the contract will all need to be considered.
As experienced civil litigation solicitors in Ebbw Vale, we regularly help clients understand their legal position when contractual disagreements cannot be resolved between the parties. To help you better understand, we'll explain what a breach of contract claim involves and what you should consider before taking legal action.
What is a breach of contract?
A breach of contract occurs when one party fails to perform an obligation that they are legally required to perform under the agreement.
The breach could take several forms - someone may fail to do something they promised to do, do it incorrectly, do it later than agreed or refuse to perform the contract altogether.
For example, imagine a business agrees to supply £20,000 worth of equipment by a particular date. If the supplier does not deliver the equipment and has no contractual or legal justification for doing so, the customer may have a claim for breach of contract.
Equally, if a contractor agrees to complete specific work for a customer but fails to carry out the work in accordance with the contractual requirements, that may potentially amount to a breach.
However, it's important to recognise that not every disagreement between two parties is automatically a breach of contract. The precise wording of the contract and the circumstances surrounding the dispute matter enormously.
Can you sue someone for breach of contract?
Yes, potentially. If you can establish that a legally enforceable contract existed, that the other party breached it and that you suffered a legally recoverable loss as a result, you may have grounds to bring a breach of contract claim.
That does not necessarily mean that going straight to court is the best option.
The courts expect parties to take reasonable steps to understand and resolve their dispute before commencing proceedings. Where there is no specific pre-action protocol covering the dispute, the Practice Direction on Pre-Action Conduct and Protocols sets out expectations including exchanging relevant information, attempting to settle the dispute and considering alternative dispute resolution.
In many cases, a carefully prepared letter setting out the breach and what you are seeking can be an important first step.
Read: Resolving civil disputes without going to court
What can you claim for breach of contract?
The most common remedy is damages, intended to compensate the innocent party for loss caused by the breach.
The amount will depend on the particular circumstances. It is not simply a case of choosing an amount that seems reasonable. You generally need to establish the loss that resulted from the breach and demonstrate that the loss is legally recoverable.
For example, if a supplier's failure to deliver goods caused a business to lose money, the business may potentially be able to recover losses flowing from that breach, subject to the usual principles governing contractual damages.
There may also be circumstances in which the appropriate remedy involves requiring a party to perform its contractual obligations rather than simply paying compensation. Whether such a remedy is available depends on the facts and the nature of the contractual obligation.
What if the contract is verbal?
A contract does not necessarily have to be a formally signed document.
Depending on the circumstances, a legally binding contract can arise from verbal discussions, correspondence, emails or the conduct of the parties, though the obvious difficulty with verbal agreements is often proving exactly what was agreed.
This is one reason why keeping written records of important agreements can be extremely valuable. Emails, quotations, invoices, messages and other correspondence may all help establish what the parties agreed and what subsequently happened.
What should you do if someone breaches a contract?
Before considering court proceedings, it is usually sensible to establish exactly what the contract says and identify the specific obligation that you believe has been breached.
You should then consider the evidence supporting your position and the financial consequences of the breach. Depending on the circumstances, it may be appropriate to contact the other party directly or send a formal letter setting out the nature of the dispute and the remedy being sought.
It is important not to overlook the possibility of negotiation. Civil litigation can be time-consuming and expensive, and the court's own guidance encourages parties to consider settlement and ADR before and during proceedings.
What happens if the dispute cannot be resolved?
If negotiations fail, court proceedings may ultimately be necessary.
The appropriate procedure will depend on factors including the value and complexity of the claim. A solicitor can help you assess the evidence, identify the appropriate legal basis for the claim and determine the most suitable route for pursuing it.
If proceedings are issued, the case will follow the relevant Civil Procedure Rules. The court will consider the parties' respective positions and evidence before ultimately determining the dispute if it cannot be settled.
It is worth remembering that bringing a claim is not without risk.
Court fees, legal costs, evidence and the possibility of an adverse costs order all need to be considered before commencing litigation.
Read: How to prepare for a civil litigation case
Is there a time limit for a breach of contract claim?
Yes. Limitation periods are extremely important.
For many claims founded on a simple contract, the Limitation Act 1980 provides a six-year limitation period from the date the cause of action accrued.
However, this should not be treated as a universal six-year deadline for every contractual dispute. Different limitation rules can apply depending on the nature of the agreement and the legal basis of the claim.
Waiting until the limitation deadline approaches can also create unnecessary difficulties. If you believe someone has breached a contract and you may need to take legal action, obtaining advice promptly is generally sensible.
Do you need a solicitor to sue for breach of contract?
You are not necessarily required to instruct a solicitor, particularly for straightforward lower-value disputes. However, contractual claims can become complicated surprisingly quickly.
Questions about the interpretation of contractual terms, liability, evidence, financial losses, limitation and the appropriate remedy can all have a significant impact on whether a claim succeeds.
Getting advice at an early stage may also help you avoid unnecessary litigation by identifying whether there is a realistic claim and whether the dispute could be resolved through negotiation or another form of dispute resolution.
Get advice about a breach of contract dispute
A contractual dispute can be frustrating, particularly when you have done what you agreed to do but the other party has not.
If you believe someone has breached a contract and you are considering taking legal action, it is important to understand your position before committing to court proceedings. At Fonseca Law, our civil litigation solicitors in Ebbw Vale advise individuals and businesses across South Wales on contractual disputes and other civil claims.
We can help you understand whether you may have a valid breach of contract claim, what evidence you may need and what options are available for resolving the dispute.
If you are dealing with a contractual dispute, obtaining legal advice early could help you understand your options and avoid unnecessary time and expense.