A contract is a promise or set of promises that are legally enforceable and, if violated, allow the injured party access to legal remedies.
The requisite elements of a contract that must be established to demonstrate the formation of a legally binding contract are (1) an offer; (2) an acceptance; (3) consideration; (4) mutuality of obligation; (5) competency and capacity; and, (6) in certain circumstances the requirement for a written document.
Breach of contract is a term that describes the violation of a contract or an agreement that occurs when one party fails to fulfill its promises according to the provisions of the agreement.
Defences to Breach of Contract
As in all civil proceedings, a defendant has a right to offer a reason why the alleged breach is not really a breach of contract or why the breach should be excused.
Usually the dispute involves:
- If the work was part of the contract.
- Work poorly carried out.
- That a requirement of the contract had not been complied with.
- That the other side had brought the contract to an end through their actions.
Other forms of Defence to a dispute that may sometimes be found are:
Fraud: This means “knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment.” The defendant must establish that the fraud was deliberate.
Duress: This occurs when one person compels another to sign a contract through physical force or other threats.
Undue influence: This means that one party had a power advantage over the other and that he used that advantage to force the other to sign the contract.
Mistake: An error committed by the defendant cannot invalidate a contract and take away a breach of contract case, but if the defendant can prove that both parties made a mistake about the subject matter, it might be enough to invalidate the contract and this would serve as a defence.
Limitation: Many types of cases have time limits stipulated by law, deadlines by which a case must be brought and filed. A breach of contract claim can fail if limitation has expired.
Remedies for Breach of Contract
The most common remedy when one party is found to be in breach of a contract is monetary payment to place the party back in the position as if the contract had been properly performed.
Other remedies include specific performance (the requirement to complete a contact) and rescission (the cancellation of a contract and the return of the parties to the positions they would have had if the contract had not been made).
The issues that normally must be concentrated on are:
- How did the contract come about.
- What was the contract for (contracts do not need to be in writing).
- What went wrong and how did the contract come to an end.
- What losses were incurred.