In business you are always exposed to the possibility of a dispute leading from a purported or real breach of the terms of a contract.
Often one party does not agree there has been a breach of contract whilst the other party is adamant there has been.
What are the types of breaches in a contract?
When considering a breach they are generally divided into four types:
- An Actual breach occurs when a party simply fails to perform their obligations pursuant to the contract;
- An Anticipatory breach is when one party indicates to the other, they will not be able to or refuse to fulfil their obligations but it has not yet occurred;
- A Material breach relates to the failure to perform a key obligation pursuant to the contract and the other party is significantly disadvantaged as a result;
- A Minor breach occurs when a party only performs part of its obligations and can easily rectify that breach resulting in at most damages.
What are my legal options for a breach of contract?
When a breach occurs there are a number of legal options to tray and resolve any dispute arising form a breach of a contract.
It is important to realise that it does not always need to end up in the courts there are avenues for alternative dispute resolution including arbitration, conciliation and mediation.
- Arbitration is a process where the parties engage an arbitrator who is an independent third party to whom they present evidence and argue their position before the arbitrator makes a determination which is generally binding;
- Conciliation is a process where an independent third party being the conciliator, who will usually have expertise in the area of the dispute, to identify the issues in dispute and consider options to try to reach an agreement to resolve the dispute
- Mediation is a process where an independent third party, known as the mediator, attempts to assist the parties to identify the issues in dispute and consider options to try to reach an agreement to resolve the dispute.
Conciliation and mediation can be very similar in their approach but generally a conciliator will have specialist knowledge and will volunteer you some legal information, provide specialist or expert advice to resolve the matter by actively encouraging the participants to reach agreement, whereas as a mediator will assist the parties to reach agreement without offering opinions.
Often if mediation fails parties will go to conciliation to try and resolve the matter.
It is always preferable to try and negotiate with a party you are in dispute with to try and resolve the matter.
If this fails then you can seek legal remedies such as:
- Damages – There are a range of damages available including compensation and liquidated damages.
- Injunction – An injunction is a Court order directing a party to do a specific thing or, more commonly, to not do a specific thing.
- Specific performance – In this instance the court will order that the party in default carry out the performance of the contract by the party in breach and often occurs where damages are deemed insufficient.
- Termination of the contract.
How do you avoid contract disputes?
As lawyers the main issue we see that lead to disputes relating to a contract are the fact they have been poorly drafted and do not clearly outline the intentions of the parties.
Whilst there is no such thing as a dispute proof contract, it is important to obtain expert assistance to ensure that your contract is drafted in clear and precise language to avoid uncertainty and ambiguity.
How can FC Lawyers help?
Our business and corporate team have been assisting business clients in a range of industries and professions in contract negotiation, drafting and dispute resolution processes for over 30 years.
Contact our team to discuss any breach of contract issues or business law in general.
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