What to do When Facing a Breach Of Contract
Whether you’re a business owner, a freelancer or simply an individual managing your personal dealings, you will likely have entered into a contract at some point in time. Contracts serve as the backbone of trust and legality, but unfortunately, a breach of contract is not an uncommon occurrence. When such a breach happens, it can disrupt your operations or personal plans, leading to potential losses and undesirable conflicts and knowing how to react can make all the difference.
What is a Breach of Contract?
Simply put a breach of contract occurs when one party doesn’t fulfil their part of an agreement. This could mean anything from not delivering goods on time, failing to provide services as agreed, or even not paying for goods received. In South Africa, contracts can be written, verbal or implied, and breaches can happen within any of these.
Steps to Take When a Breach Occurs
Consult a Legal Professional:
If the breach is significant it is advisable to consult a legal professional. An attorney specialising in contract law can provide valuable advice on your rights and the best possible course of action. They can also help draft any necessary legal documents and represent you if the matter goes to court.
Stay Calm and Review the Contract:
When you realise a breach has occurred, the first step is to stay calm and review the contract carefully. Look at the terms and conditions, especially the sections related to obligations, deadlines and breach consequences. Understanding the specifics will help you determine whether or not a breach occurred, the severity of the breach and what your next actions should be.
Communicate with the Other Party:
Once you have a clear understanding of the breach of contract, reach out to the other party. Sometimes, breaches occur due to misunderstandings or unforeseen circumstances. Open communication can often resolve issues quickly. Explain your concerns clearly and listen to their account. Aim for an amicable solution that benefits both parties if possible.
Document Everything:
It’s important to keep detailed records of all communications and actions related to the breach. This includes emails, letters, notes from phone calls and any other relevant documentation. Having a paper trail can be incredibly helpful if the situation escalates and you need to take further action.
Consider Mediation:
If direct communication doesn’t resolve the issue, consider mediation. Mediation involves a neutral third party who helps both sides come to an agreement. It’s a less formal and often less expensive option than going to court. An attorney who specialises in contract disputes can be approached to act as a mediator.
Remedies for Breach of Contract
When a breach of contract occurs, there are several remedies available to the non-breaching party:
- Damages: The most common remedy is to seek damages. This involves monetary compensation for any losses incurred due to the breach. There are different types of damages, including compensatory, nominal and punitive damages.
- Specific Performance: In some cases, you might want the breaching party to fulfil their part of the contract rather than seek monetary compensation. This is known as specific performance and the courts can order the breaching party to complete their obligations as outlined in the contract.
- Cancellation and Restitution: If the breach is severe, you may choose to cancel the contract altogether. Cancellation allows you to be released from your obligations under the contract. Additionally, you can seek restitution, which means you can ask for the return of any benefits conferred to the breaching party.
Preventing Future Breaches
Handling a breach of contract is challenging, but it also offers valuable lessons for the future, and what can be done to prevent breaches from happening again:
Clear and Detailed Contracts
Ensure all your contracts are clear, detailed and specific as ambiguities can lead to misunderstandings and disputes. It’s best to have a legal professional draft and review your contracts to ensure they cover all bases.
Regular Communication
Maintain regular communication with all parties involved in a contract. Check in periodically to confirm everyone is on the same page and fulfilling their obligations.
Set Realistic Expectations
Be realistic about what can be achieved and set achievable deadlines. Unrealistic expectations and tight deadlines are common causes of contract breaches.
Build Strong Relationships
Building strong, trustworthy relationships with the parties you contract with can go a long way in preventing breaches. When both parties value the relationship, they are more likely to work through challenges together.
Final Thoughts
Dealing with a breach of contract can be stressful and requires a methodical and informed approach. When in doubt, seek legal advice to protect your interests and ensure a fair resolution. If you find yourself facing a breach of contract, contact Cawood Attorneys to guide you through the process. We aim for an amicable solution that benefits both parties as much as possible, helping you avoid similar situations in the future.