A breach of contract occurs when a party to the contract fails to carry out their obligations under the terms of the contract. Contract law is a complicated area of law and even with a contract in place, parties can find it difficult to enforce terms, resulting in a breach of contract. In this article, we will analyse the important elements that need to be considered when a contract has been breached.
Establishing the Contract Exists
In most cases, a contract does not need to be a paper document, which is signed by all parties and written in legalese. An oral contract agreement can prove to be as equally binding as one made on paper. However, three crucial elements must be present in a legally binding contract.
1. There must be an agreement put in place
2. There must be the intention between the parties to have a legal relationship
3. There must be a consideration for the contract
Usually, an agreement will be reached by the chosen parties when a party makes an offer which is then accepted by the other party. The parties must intend to form a legal agreement for a contract to be able to exist. Unless stated otherwise, the law will assume that in a commercial contract the parties intend to be legally bound. However, it is worth remembering that certain contracts must be made in writing, such as the sale of land or properties. The consideration element of a contract to something of value which is given in exchange for a promise.
Breach of Contract
After establishing that a contract exists, the next part of the process is to evaluate whether a breach of contract has occurred. If one party fails to meet the obligations within the contract, then it is considered a breach of contract. In some situations, a breach may not have occurred yet, but it becomes apparent to the other party that it will. A business may need to take the appropriate steps to ensure that the contract is not breached or make an alternative agreement.
What is in the Terms of the Contract?
Legal arguments can occur when a contract is breached, usually revolving around what parties have agreed upon within their terms of the contract. This often occurs when a contract has been made verbally. Terms are either expressed or implied within a contract.
Expressed terms are agreed upon at the time of when the contract was made and is contained within the document. Whereas implied terms are not contained within the contract which courts may infer as having been there. They could occur from the ‘officious bystander test’ in which case it is assumed that an ‘officious bystander’ has been standing by when the parties entered a negotiation, and the understanding that an officious bystander would make of the agreement. They can also be implied in the terms of the contract which would otherwise be unworkable without the implied terms.
Do You need Help Dealing with a Breach of Contract?
At Van Eaton Solicitors, we act for individuals and small businesses in contract disputes. Every contract is different, some may be written, and others may be the result of long-standing and informal business dealings. Our lawyers in London have extensive experience, which means that we can quickly assess the terms of the contract and advise you on your legal standing. We carefully examine each contract on a case-by-case basis, so that our advice will be personally tailored to your situation.
If you are seeking legal advice on how to handle a breach of contract, please get in touch with us today by calling 0208 769 6739. Alternatively, you can fill out our online contact form here.