A contract will set out the terms of the service to be provided or goods to be sold; so, it is very important that these are clearly set out and not stated in vague or ambiguous language.
A breach can occur if one party fails to perform his duties as agreed in the contract or does something not agreed or is not fulfilling his obligations. There are exceptions to unfulfilled contracts as set out below.
The question of liability then must be examined where there is a breach. The consequences of such a breach will determine the extent of the liability (damages) on the party at fault.
Here the contract and its terms will come under scrutiny. Was the contract legally enforceable? Was the contract executed correctly? What loss was suffered by the injured party?
A common breach, which can give rise to action for loss suffered, is the non-fulfilment of one or more obligations under the contract. However, the omission if minor may not be sufficient to declare a breach of contract by the offending party. The seriousness of the breach will depend on the terms of the contract and what impact the breach has in terms of damage to the injured party.
Where the breach is serious, the injured party can:
- a) Claim fundamental breach of contract
- b) Claim the contract no longer exists because the breach is so serious
Alternatively, the injured party could seek a court order of specific performance which compels the other party to fulfil the contract terms.
Defences to Breach of Contract
The party in an alleged breach can claim the breach is not as serious as claimed and offer to fix the breach/omission.
A party alleged to be in breach can claim in defence that the other party exerted threats or undue influence.
The contract could have been unenforceable such as in breach of public policy.
The contract may not have been properly executed.
Exercise of the Force majeure provision. This clause is standard in contracts. It can excuse liability for situations that were unforeseen and as a result beyond the control of the contracting parties.
Lastly, a party may claim in defence that the contract was ‘frustrated’. This occurs where a supervening event occurs without the fault of either party, or for which the contract makes no provision. The event must so significantly change the nature of the outstanding contractual rights and obligations from what the parties could reasonably have contemplated, so as to make holding them to its stipulations unjust. For example, where a concert had to be cancelled because of the Covid pandemic.
When entering into a contract be sure to discuss it first with your solicitor to ensure it is a valid contract and not one that lands you in court.