Breach of contract disputes come in many shapes and sizes but at the heart of every matter the fundamental issue is largely the same. A binding agreement has been reached between two or more parties and for some reason the agreement is not being honoured by one or more of the parties to that agreement.
Types of breach of contract
Broadly speaking breaches of contract generally fall into either material or minor breaches that are either actual or anticipated. These terms are explained below.
- Material breach of contract – One of the central or key elements of the contract is not fulfilled. For example, if you were to purchase furniture online such as a table and chair set but only the table was delivered then the seller would have materially breached the contract;
- Minor breach of contract – A small breach may not necessarily invalidate or end an entire contract. In the example above, if a 24 piece dinner set was included as an added bonus in the contract but it wasn’t delivered with the table and chairs it would not mean the contract was automatically cancelled although the seller would of course need to still deliver the promised dinner set to ensure they had complied with the contract in full.
While the example given above is a simple one it is useful in illustrating in broad terms what is meant by the phrase ‘breach of contract’.
Express vs. Implied contractual terms
Some contracts will specifically provide that the failure to do or provide something will be considered a breach of contract. For example, an employment contract may specify that failing to turn up to work on certain days is considered a breach of contract. This would be considered to be an ‘express term’ of the employment contract. The same employment contract may not specifically prohibit an employee from divulging sensitive or confidential information to people outside the company. However, this is likely to be considered an ‘implied term’ of the contract.
Types of disputes and remedies
Disputes involving breaches of contract can occur in almost all aspects of business and even personal dealings. The remedies available vary according to the type of contract and the nature of any breach but can include:
- Damages – Compensation to the party who has suffered a loss as a result of the breach; and
- Court orders and injunctions – The party in breach of contract may be prevented from committing a breach or stopped from continuing with a breach. The offending party may also be ordered to fulfil their contractual obligations (an order for specific performance).
A Court may also determine that a breach is so significant that a contract is ended and may order the party in breach to return the innocent party to a position that they were in prior to the contract being entered into.
Australian Consumer Law contracts
Australian Consumer Law applies to consumer contracts nationally and forthcoming changes to that law will have a major effect on how business to business contracts are considered by the Courts where one or more parties to the contract falls within the definition of a ‘small business’. If you think you may be affected by these changes we are able to advise and assist you with any concerns you may have.
If you need advice in relation to a contractual dispute please feel free to contact us by phone or email to discuss your concerns.