WHAT IS A BREACH OF CONTRACT

Say you want to hire a landscaping firm to put in a new garden. After discussing the details, the landscapers promise the garden you want by a set date. You promise to pay them a deposit up front and the rest when they’ve finished. That would be a contract. A contract is a legally binding agreement between competent parties that a court will enforce.

So what is a “breach” of contract? That’s when one party breaks the contract – the landscaping firm plants cedar trees instead of the magnolia trees called for by the contract.

What can you do if the other side breaches the contract? Normally, if the other party doesn’t do what they promised in the (hopefully written) agreement, you can get compensation (called “damages”) as one of your key remedies. In some cases, if things are going really sideways, you may also be able to cancel the contract.

But do you have to wait until the other side doesn’t do as promised before there’s a breach? What if, well beforehand, the other side makes it clear they have no intention of going through with their part of the bargain? If there’s no acceptable reason for that (e.g. they say they won’t do the work because it’s a bad deal for them), you may be able to treat the contract as breached.

At this point, you have the option to accept the breach and get compensation, though you should try and minimize your loss. Using our landscaping example, you’d want to try and hire a replacement outfit to do the landscaping work for the best price then available, and sue for the difference. Alternatively, you could insist that the other party perform their side of the deal (but then you must be ready to perform your part of it too).

In a few rare cases, where money wouldn’t adequately compensate for a breach, a court may order “specific performance,” forcing the other side to do what they promised. Your lawyer can advise you if “specific performance” is available in your particular case.

Sometimes the agreement itself spells out pre-agreed consequences of a breach (e.g., it could say that the innocent party can cancel the contract in certain situations and keep a reasonable deposit put up by the other side).

Timing can be a critical issue. The contract may say that a specific time for performance is essential (e.g., May 31 for completion of the garden). If you casually let the date pass without objection (“Oh well, everyone knows contractors are always late”), and don’t fix another date as critical, you may find you cannot later insist on damages for the delay. So this could allow the other side to carry out the work later than promised without penalty (unless the contract specifies a penalty).

There are, in fact, a whole lot of wrinkles and special rules that come into play when there’s a contract dispute and a supposed breach of contract. If the agreement is important enough, you may want to talk to your lawyer up front for help with preparing it. Your lawyer can also help if you are facing a breach of contract situation. Be mindful there are time limits (called “limitation periods”) for enforcing a contract or seeking compensation – so don’t delay seeking help.

 

This column has been written by Janice Mucalov LL.B as part of “You And The Law”. It provides information only and must not be relied on for legal advice. Names of the parties in reported cases have been changed or removed to protect their identity. Lawyer Janice Mucalov is an award-winning legal writer.

Comments are closed.