A contract is a legally binding document signed by two parties to the agreement of a set of terms. Interestingly, some contracts need not be written although this is always advisable. Sometimes a verbal agreement can be held to be legally enforceable and binding. A contract normally contains two key components, the first being that both parties must be in complete agreement to the entire terms of the contract. Secondly, there must be some form of consideration, this is something of value which is exchanged in return usually for something else of value. A common example of a contract in its simplest form, is the agreement of goods or services in exchange for payment.

Problems arise for individuals when a breach of a contract occurs. A breach of contract is often defined as non-performance by one party to a term, or impossibility to a term of the contract. Often a breach of contract can be resolved by the parties themselves, or there may be a clause in the contract which allows for termination should a breach ever occur. However, if no such term is found, then a commercial lawyer can be of great use. A commercial lawyer will review the contract, and try to seek a remedy that will be of satisfaction to the client.

Remedies for breach of contract are varied, and not all are suitable for each case of potential breach, a few of the most common contract remedies are detailed below:

1. Damages- damages for breach of contract are available as a right. The damages may be nominal or substantial, with the claimant only being entitled to recover damages provided they are not remote. The legal principle for remoteness is laid down in Hadley v Baxendale, and states that all loss which flows naturally from the breach, and also all loss which was in contemplation of the parties at the time the contract was created will be recoverable.

2. Specific performance- specific performance is an order by the court, to compel a party to undertake their performance to a term of the contract. This is only applicable to cases where the subject matter is unique, and for that reason is seldom used.

3. Injunction- an injunction is an equitable remedy granted at the discretion of the court, and is only available when damages would not be an adequate remedy, because the claimant needs to restrain the defendant from starting or continuing the breach.

4. Restitutionary Damages- these damages are measured by the benefits that the defendant has gained, as opposed to measuring the damages as those of the loss of the claimant. These damages are always worth considering when there is no measurable loss to the claimant rather there is measurable gain accrued to the party in breach.

Anyone, who is in the belief that a contract has been breached will need to be aware of limitation periods that can prevent a breach of contract claim. The Limitation Act 1980 is the governing piece of legislation and distinguishes between deeds and simple contracts. The limitation period for a simple contract is six years from when the causal action accrued. Whereas, for deeds it is 12 years from when the causal action accrued. Alternative dispute resolution (ADR), should always be at the forefront of any claimant’s mind. ADR can be beneficial in contract disputes both for cost saving and also a decision may be reached at a sooner date meaning that time allocated by both parties to the dispute is kept to a minimum.

Summerfield Browne have offices in London, Birmingham, Cambridge, Oxford, Northampton & Market Harborough, Leicester.