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How to Deal with a Contract Breach

Deal with a contract breach by assessing the severity of the breach (minor warranty breach vs material breach of condition), sending a formal breach notice, seeking a remedy (cure, damages, or termination), and escalating through the dispute resolution procedure if the breach is not resolved.

Last updated: February 2025

Step-by-Step Guide

1

Assess the nature and severity of the breach

Determine whether the breach is of a condition (fundamental), a warranty (minor), or an innominate term. This determines your available remedies.

Tips
  • •Only a breach of condition or repudiatory breach entitles you to terminate the contract.
2

Document the breach thoroughly

Collect all evidence including communications, deliverables, financial impact, and a timeline of events.

Tips
  • •Keep contemporaneous records rather than relying on memory later.
3

Send a formal breach notice

Notify the other party of the breach, cite the specific clause, state the required remedy, and set a deadline for response.

Tips
  • •Follow the contract's notices clause precisely.
4

Assess your remedies

Consider your options: requiring performance, claiming damages, seeking specific performance or an injunction, or terminating the contract.

Tips
  • •Damages are the primary remedy; specific performance is only granted when damages would be inadequate.
5

Escalate through the dispute resolution procedure

Follow the contract's dispute resolution mechanism and the Pre-Action Protocol before issuing court proceedings.

Tips
  • •Consider mediation, which resolves most commercial disputes more quickly and cheaply than litigation.

Legal Requirements

The common law of contract provides remedies including damages, specific performance, injunctions, and rescission. The Limitation Act 1980 sets a six-year time limit for breach of contract claims (twelve years for deeds). The Civil Procedure Rules Pre-Action Protocols must be followed before issuing proceedings.

Common Mistakes

Treating a minor breach as grounds for termination, exposing yourself to a wrongful termination claim
Continuing to perform after a repudiatory breach without reservation, potentially affirming the contract
Not mitigating your losses, which reduces the damages you can claim

Template / Example

Dear [Party], We write to notify you of a material breach of clause [X] of our agreement dated [Date]. The breach consists of [description]. We require you to [remedy] by [date]. Failing this, we reserve our right to terminate the agreement and claim damages. Nothing in this letter shall be taken as a waiver of any of our rights.

When to Get a Solicitor

If the breach is material, involves significant financial loss, or if you are considering terminating the contract, as wrongful termination can expose you to counter-claims.

FAQ

What is the difference between a breach of condition and a breach of warranty?

A condition is a fundamental term; breach entitles the innocent party to terminate and claim damages. A warranty is a lesser term; breach only entitles the innocent party to claim damages, not to terminate.

Do I have to mitigate my losses after a breach?

Yes. The innocent party has a duty to take reasonable steps to minimise their losses. You cannot claim for losses that could have been reasonably avoided.

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This is guidance, not legal advice. Consult a solicitor for complex matters.

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