Either party can breach the contract whether as the supplier or as the customer. In the UK, contract law governs the rights and responsibilities of parties who enter into contract. When a breach of contract happens, the non-breaching party is entitled to certain legal remedies, including claims for damages, specific performance, or contract termination.
When Do Breaches of Contract Occur?
A breach of contract occurs when one party fails to perform one or more of their obligations that have been agreed in a contract. Breaches of contract can be anything from late payment to a failure to deliver what was promised. Determining whether a breach has occurred would be the first step in handling any supposed breach. This can be more difficult in the absence of a written contract. It would then be important to determine the seriousness of that breach.
Breaches can lead to financial losses depending on the seriousness, whether this is due to direct costs like needing to hire someone else to perform the agreed tasks or indirect costs such as loss of revenue, clients, or reputation. This in turn could mean the non-breaching party may be entitled to damages (compensation) for any losses incurred due to the breach, which can be costly for the party at fault. For this reason, we advise any breaches are limited to direct losses only and limiting the value of what can be claimed.
How to Handle Contract Breaches
When dealing with breaches or potential breaches, consider the following pointers:
- Clear Contracts: Ensure that contracts are clearly written and outline each party’s responsibilities, timelines, and penalties for non-compliance.
- Good Communication: Maintain open lines of communication with your business partners and clients to avoid any misunderstandings and discuss as soon as any breach is likely to occur.
- Legal Support: Work with someone like us to ensure any contracts you sign or give to your clients are legally sound and protect you in case you or the other party does breach.
- Dispute Resolution: Consider incorporating clauses in your contracts for mediation or arbitration, which can help resolve issues without having to go to court.
Ultimately, a breach of a contract can have significant implications for your business, both legally and financially. Therefore, it’s crucial to manage risks carefully and limit your liability where you can to minimise its potential damage. Similarly, if you are not the party in breach and are dealing with a party who has failed in their obligations, it’s important to understand what your next steps are to minimise any disruption to you and your business. If you need expert advice or support in managing a breach or protecting your contracts, get in touch with BEB Consultancy today — we’re here to help safeguard your business.