Civil & Commercial

When a contract breaks down, the wording rarely settles it on its own.

Breach of contract, payment disputes and contested commercial agreements, from the first letter through to court proceedings.

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What counts as a breach

A breach occurs when one party fails to perform an obligation the contract requires, whether that is non-payment, late delivery, defective work, or a refusal to perform at all. Breaches are usually described as either a breach of condition, which goes to the root of the contract and can justify termination, or a breach of warranty, which usually gives rise to a claim for damages while the contract continues.

The starting point in any dispute is establishing exactly what was agreed. Written terms are not always the whole story: course of dealing, implied terms and, in some cases, pre-contractual representations can all affect how a court reads the agreement.

Remedies available

Damages are the usual remedy, intended to put the innocent party in the position they would have been in had the contract been performed. In limited circumstances a court may instead order specific performance, requiring the defaulting party to actually carry out the obligation, or rescission, unwinding the contract. Where a contract includes a liquidated damages clause, its enforceability against the penalty rule can itself become a live issue.

Before you issue a claim

The Practice Direction on Pre-Action Conduct expects parties to exchange information and attempt to resolve the dispute before proceedings start. Skipping this step can affect costs later, even in a claim you go on to win.

Limitation periods

Under the Limitation Act 1980, a claim for breach of a simple contract must generally be brought within six years of the breach. Contracts executed as a deed carry a twelve-year period. Time runs from the breach itself, not from when the loss becomes apparent, so early advice matters even in disputes that are not yet urgent.

Resolving the dispute

Many contract disputes settle before trial, through direct negotiation, mediation, or a formal Part 36 offer, which carries costs consequences designed to encourage realistic settlement. Where agreement is not possible, claims proceed in the County Court or the High Court depending on value and complexity, with the small claims, fast track or multi-track applying accordingly.

Law, procedure & strategy

Contract disputes are won on construction, evidence and remedy

Most commercial contract disputes begin with the contractual documents, the surrounding admissible evidence and the remedy actually available. Before proceedings, parties are normally expected to comply with the Practice Direction – Pre-Action Conduct and Protocols: identify the issues, exchange sufficient information, consider settlement and ADR and avoid disproportionate cost.

Wood v Capita Insurance Services Ltd [2017] UKSC 24 confirms the modern approach to contractual interpretation: the court reads the words used in their documentary, factual and commercial context through an iterative process rather than choosing between literal wording and commercial common sense as rival tests. Cavendish Square Holding BV v Makdessi [2015] UKSC 67 is the leading authority on contractual penalties and asks, in substance, whether the impugned provision imposes a detriment out of all proportion to the innocent party’s legitimate interest in performance.

Limitation, termination rights, exclusion clauses, entire-agreement clauses, notice provisions, contractual interest, set-off and the measure of damages can materially alter the case. Part 36 offers and ADR should be considered strategically because they can affect costs even where the substantive claim is strong.

Key sources: Limitation Act 1980; CPR Practice Direction – Pre-Action Conduct and Protocols; CPR Part 36; Wood v Capita [2017] UKSC 24; Cavendish v Makdessi [2015] UKSC 67.

Frequently asked questions

Can I sue if the contract was not signed?
Potentially. Contracts can arise orally, by conduct or through an exchange of documents, although some transactions require particular formalities. The evidence of offer, acceptance, consideration, terms and performance becomes critical.

How long do I have to bring a breach-of-contract claim?
Many simple contract claims have a six-year limitation period, but different periods and accrual rules can apply. Limitation should be checked at the outset rather than assumed.

Can I terminate immediately for breach?
Not every breach gives a right to terminate. The contract wording, seriousness of the breach, any cure or notice provisions and common-law classification all matter. Wrongful termination can itself create liability.

Can I recover all losses caused by the breach?
No. Causation, remoteness, mitigation, contractual exclusions or caps and the correct measure of loss all need to be considered.

Can the court enforce a penalty clause?
A clause is not invalid merely because it is severe. The modern test from Cavendish focuses on whether the detriment imposed is out of all proportion to the innocent party’s legitimate interest in enforcing the relevant obligation.

Do I have to mediate?
A party cannot safely ignore ADR. Courts can stay proceedings or direct non-court dispute resolution where proportionate, and unreasonable refusal or silence can affect costs.

Can you act under a CFA or DBA?
Potentially, where merits, value, recoverability and proportionality justify risk-based funding. Any CFA, DBA or hybrid arrangement is assessed case by case and confirmed in writing before work is undertaken on that basis.