Breach of contract
A breach of contract claim can be brought where one party fails, or indicates they do not intend, to fulfil their obligations under the contract. The Rules of the High Court of Justice 2009 provide that where a claim is based on a written agreement, a copy of the contract or document constituting the agreement must be attached to or served with the particulars of claim. The Rules provide that where the claim is based upon an oral agreement, the particulars of the claim should set out the contractual words used and state by whom, when and where spoken. The Rules further provide that where the claim is based upon agreement by conduct, the particulars of claim must specify the conduct relied on and state by whom, when and where the acts constituting the conduct were done.
Damages are ordinarily limited to placing the injured party in the same financial position as if the contract has been properly performed. There is a duty on the claimant to take all reasonable steps to mitigate their losses caused by the breach. If there were reasonable steps the non-breaching party could have taken to avoid or mitigate their loss as a result of the breach, they cannot recover damages for such avoidable loss.
Courts will award damages for a breach if they arise naturally from the breach or if they should have been in the reasonable contemplation of the parties at the time of the contract, as being probable as a result of the breach. Should the breach be sufficiently serious, the other party to the contract may have sufficient grounds to cancel the contract entirely. The court can order specific performance or injunctions where damages would be an inadequate remedy.
The Supply of Goods and Services Act 1996 implies certain conditions into a contract.
In relation to the supply of goods in the course of business, these are that:
- the seller has title to sell;
- the goods correspond with the description;
- they are of satisfactory quality;
- they are reasonably fit for purpose (the buyer must expressly or impliedly make the seller aware of the purpose); and
- a sample provided will correspond with the bulk of the goods.
For supply of services in course of business, the implied terms are:
- the supplier will use reasonable care and skill;
- the service will be carried out within a reasonable time; and
- if the contract is silent as to consideration, the contracting party will pay a reasonable charge.
The court also considered its powers to imply clauses into contracts in the case of Hodgson v. Tuck.
Evidence as to the intentions of the parties and the precise terms of the contract, especially when dealing with oral contracts, are the most common evidentiary issues that face the courts. Care should be taken to ensure that the contract accurately records the entirety of the agreement between the parties and that both parties understand their obligations.
A recent judgment, Carters & otr v. FCS & otrs, highlights that a claimant must be careful and provide clear evidence of the losses claimed. The court will be reluctant to award the damages sought if not supported with clear evidence of the loss.