Whether you’re buying a new car or selling your goods online, the chances are that you will have entered into a contract with the other party involved.
Having the contract in writing is always a sensible idea, as it protects both buyers and sellers and ensures that, if either party were to breach the contract, there would be consequences.
However, even when threatened with legal repercussions, it’s simply not possible to stop a party for breaching a contract should they want to, leaving you with no other choice than to take legal action.
But before we delve into the actions that you can take, it’s important to clearly define exactly what a contract is.
Contracts begin when two or more parties enter into a legally binding agreement, which can be made in writing, communicated orally, or through an agreement by way of conduct.
Contracts centre around three key points; an agreement, an intention to create legal relations, and consideration (i.e. one party says that they will do something in return for something else). One example of consideration is when money is exchanged for food in a restaurant; a customer and a restaurant have entered into an agreement or contract.
It’s the consideration that gives value and weight to a contract and is the most important aspect when considering legal action against a party over a breach of contract.
Breaching a contract
If one party fails to fulfil their side of an obligation, or they break the terms and conditions set out in an agreement, they have breached the contract. There are a number of ways that parties can breach contracts, but typically involve the failure to pay or the non-delivery of goods or services.
Suing someone for breach of contract
Suing for breach of contract is not always the most straightforward of processes, and you must overcome three legal hurdles to prove that your contract was breached.
The first legal hurdle is to deliver proof of the existence of a contract. A written, signed contract should be your first port of call, but other documentation, such as letters, emails, text messages, invoices and conduct can be used in substitute of a written contract in the majority of cases.
Once you have collected proof that you entered into a contract with another party, you must show that the contract has been breached. Evidence must be given to state the obligations of the accused, and that those obligations were not met (or breached), or that goods or services were not delivered to the obligated standard. Such evidence can be submitted as photographs, video files, expert testimonials or physically delivered to a court for inspection.
The final hurdle that you must overcome in order to successfully sue someone for breach of contract is showing the loss. As the injured party, it’s your responsibility to provide evidence that you suffered loss as a result of the breach of contract, and that you should be compensated as a result. Evidence can be provided in a number of methods, such as profit and loss sheets, client orders and contracts with end customers, and other written documentation.
Most claimants sue for loss that was a direct consequence of the breach of contract, but you can also claim for indirect losses. Claiming for such losses, however, is more complicated.
Before you consider suing for breach of contract, it’s important to note that, even if a court was convinced that you suffered loss as a result of a breach of contract, the process of assessing and then verifying the losses can be a long and drawn-out process, and can also be expensive.
Legal remedies for breach of contract cases
If you successfully manage to persuade the court that you suffered losses as a result of a breach of contract, then you could be entitled to receive monetary damages. Most commonly, damages are awarded to help the injured party return to the same position they would have been if the contract had not have been breached.
Is suing for breach of contract worthwhile?
It is natural to feel angry and disappointed when a company fails to deliver their end of the bargain or breaches a contract, but before you launch into a claim, you should assess your merits and evaluate whether it would be cost-effective to pursue a claim against the company.
Pursuing a breach of contract can often be an expensive and time-consuming process, and may cost you more than you lost in the first place.
There’s also the relationship between you and the contracting party to consider; suing for breach of contract could lead to long-term challenges and damage relations between the two parties, something you wouldn’t want to do in haste.
However, there are times when suing for breach of contract is the only way to resolve an issue and receive damages for the losses incurred.