When a contract goes wrong
A contract dispute rarely starts as a legal question. It starts as a bad week - work not done, invoices unpaid, someone who has stopped returning calls. The legal question comes later, and by then people have usually done two or three things that made it worse. Here is the whole arc, in plain English: what you have, whether it is a breach, what you can do about it, and what you would actually get.
- Start with the contract, not the law. Most disputes are decided by what the document already says, and the answer is usually in the boring clauses at the back.
- Not every broken promise lets you walk away. Most breaches give you a claim for damages and nothing more - the contract carries on whether you like it or not.
- The right to end a contract comes from one of two places: a termination clause, or a breach serious enough to destroy the point of the deal. Getting that wrong makes you the one in breach.
- Damages put you where performance would have - not where fairness might. You cannot recover losses you could reasonably have avoided, and you have to try to avoid them.
- Winning is not the same as being better off. Costs, time and the recovery risk decide whether a dispute is worth having, and that sum is worth doing on day one rather than month nine.
The answer is usually already written down
Before anyone talks about the law, find out what you actually agreed - which is not always the document you remember.
The instinct when a deal goes wrong is to ask what your rights are. The better first question is duller: what did we sign, and where is it?
Often the answer is untidy. There is a signed agreement from three years ago, a purchase order with different terms on the back, a scope document attached to an email, and eighteen months of practice that matches none of them. Sometimes there is no signed document at all and the contract lives in a chain of messages - which is still a contract, and still enforceable, just harder to prove.
Once you have it, read the parts nobody reads. The termination clause, because it decides whether you can leave and on what notice. The notices clause, because it decides whether anything you send actually counts. The limitation of liability, because it may cap the entire value of your claim at a number that makes the fight pointless. The dispute resolution clause, because it may oblige you to mediate first, or send you to arbitration, or to a court in another country.
That last one catches people badly. Businesses have spent months preparing a claim only to find they agreed, on page 34, to arbitrate it somewhere else entirely.
And, much more importantly, how bad
Nearly every mistake in a contract dispute is made in the gap between "they broke it" and "so I can walk away".
A breach is simply a failure to do what the contract requires. That part is usually easy. The hard part - and the part that decides what happens next - is how serious it is.
Most breaches are ordinary. You get damages for the loss and the contract carries on. Some are repudiatory: serious enough to deprive you of substantially the whole benefit of the deal, which gives you a choice about whether to end it. And sometimes nothing has been breached at all - an outside event has made performance impossible through nobody's fault, which is frustration, and ends the contract without anyone deciding anything.
Those three roads lead to completely different places, and people set off down the wrong one constantly - usually the one marked "I'm ending this", because that is what being let down feels like.
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Is there actually a contract?
No Then this is a different problem, and not a contract claim. It may still be something - a misrepresentation, a duty of care - but not this.
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Has a term actually been broken?
No Did an outside event make performance impossible or radically different, through nobody's fault? If so the contract may be frustrated, and it has already ended by itself. If not, there is no claim - a bad bargain is not a breach.
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Is the breach repudiatory, or does a termination clause apply?
No Claim your damages. The contract continues, and you keep performing your side of it.
Affirm
The contract lives. You hold them to it, and claim damages for the breach. Carry on as normal for too long and you have chosen this without meaning to.
Terminate
The contract ends. You stop performing and claim damages for the loss of the whole bargain. If you were wrong about the right to do it, you are now the one in breach.
The tree is not a substitute for reading the contract, and the third question is where all the argument lives. But it does the one thing worth doing early: it stops you skipping from the top box to the bottom right one because you are furious, which is how the wronged party ends up paying.
Being right is not an outcome
Fix it, change it, or end it. Choose before you write anything, because the letter you send commits you.
People start disputes wanting to be told they are right. That is not on the menu. The menu is: do you want the work finished, the deal changed, the money back, or out?
If you want it fixed, you are not really in a dispute yet - you are in a difficult conversation, and the contract's remedy period is your friend. If you want it changed, you want a variation, agreed properly and in writing, and a leverage conversation rather than a legal one. If you want out, you need a right to terminate that actually exists. If you want money, you need a claim, and you need to know what it is worth before you spend anything chasing it.
Those want different letters, different tones and often different people. And they are not fully compatible: the letter that gets a supplier back to the table is not the letter that preserves your position for a claim, and the one that does both is written carefully by someone who has decided which matters more.
The first letter sets the whole thing
Most disputes that go badly went badly in the first fortnight, in writing, before anyone took advice.
Whatever you decided in stage three now has to be communicated, and there are three ways to get this wrong.
The first is mechanics. If you are giving notice under the contract, do exactly what the notices clause says: the right person, the right address - often the registered office, not the person you email daily - the right method, the right period, counted the way the clause counts it. A good right exercised badly is worth nothing.
The second is tone. Everything you write will be read out later, slowly, by someone hostile. Threats you cannot carry out, allegations you cannot prove and sarcasm all look very different in a bundle two years on. Firm, specific and dull is the register.
The third is process. Before anyone issues a claim, the courts expect the parties to have exchanged enough information to understand the dispute and to have genuinely considered settling it, mediation included. This is not a formality you can skip because you are confident: a party who ignores it can be penalised on costs even when they win. Marking genuine settlement attempts without prejudice keeps them out of the court's view - but the label only works on a real attempt to settle, not on anything you would rather a judge did not see.
Damages put you where performance would have
Not where fairness would. Not where your outrage would. Where the contract, properly performed, would have left you.
The basic measure is simple and unromantic: money, in the amount needed to put you in the position you would have been in if the contract had been performed. Not to punish them. Not to reflect how badly they behaved. To fill the hole.
Three things then cut it down, and they surprise people.
- Remoteness. You recover losses that arise naturally from the breach, or that both parties could reasonably have contemplated when they made the contract. The spectacular consequential loss nobody saw coming is usually not recoverable.
- Mitigation. You must take reasonable steps to limit your loss, and you cannot recover for losses you could reasonably have avoided. Sitting still and letting the damage grow so the claim looks better does not work.
- The liability cap. Whatever the law would give you, the contract may already have limited. This is why stage one matters - the cap can make a perfectly good claim commercially pointless, and it was agreed years before anyone was cross.
Making them actually perform - specific performance - is possible but rare. The courts award it only where money genuinely is not an adequate answer, and their strong preference is damages. It is not the default just because you would rather have the thing than the cash.
And there is a clock. For most contracts you have six years from the breach to bring a claim, and twelve if the contract was executed as a deed. It sounds like plenty. It goes quickly when everyone is hoping the relationship recovers.
Winning and being better off are different things
The sum nobody does on day one, and everybody does on month nine.
Here is the conversation most people do not get until they are already paying for it.
A claim is worth what you can recover, minus what it costs to recover it, minus the risk of losing, minus the chance they cannot pay, minus the value of the months you and your team will spend on it instead of on the business. Run that sum honestly on a £40,000 claim against a company with no assets and the answer is usually: do not.
Costs are the part that gets misunderstood. The general rule is that the loser pays the winner's costs - but not all of them. Recovering somewhere around two-thirds is a fair working assumption, so even a clean win leaves you out of pocket on fees, before counting the time. And that is a win. Most cases settle, and the ones that settle well are the ones where somebody worked out early what the case was actually worth and negotiated from there rather than from indignation.
Which is why the most valuable thing a good adviser does here is often to talk you out of it - or to tell you plainly that you are right, they are wrong, and it still is not worth the fight. That is a service, not a lack of appetite.
Silva takes commercial disputes commercially. We read what you signed, tell you where you actually stand, and give you the honest arithmetic before you commit to anything - including, when it is the right answer, that the cheapest version of this dispute is the one that ends next week.
Frequently asked questions
What is a breach of contract?
A failure to do something the contract requires - not performing, performing late, or performing badly. Every breach gives the innocent party a claim for the loss it caused. Only a serious breach, one that deprives them of substantially the whole benefit of the contract, also gives a right to bring the contract to an end.
What are the remedies for breach of contract?
Damages are the main one: money to put you in the position you would have been in had the contract been performed. In limited cases a court will order specific performance, requiring the other side actually to do what they promised, but only where damages are not an adequate remedy. Where the breach is serious enough, you may also have the right to terminate.
How long do I have to bring a breach of contract claim?
Six years from the date of the breach for an ordinary contract, and twelve years if the contract was executed as a deed. The clock runs from the breach itself, not from when you noticed it or when the relationship finally broke down, which is why long-running disputes can quietly run out of time.
Do I have to go to court to resolve a contract dispute?
Almost certainly not, and you are expected to try not to. Before proceedings the courts expect the parties to exchange information and genuinely consider settlement, mediation included, and a party who unreasonably refuses can be penalised on costs even if they go on to win. Your contract may also require mediation or arbitration first. The vast majority of disputes settle.
Can I recover my legal costs if I win?
Usually some of them, not all. The general rule is that the unsuccessful party pays the successful party's costs, but only those that are reasonable and proportionate - recovering around two-thirds is a realistic working assumption. Which means even a clear win leaves you out of pocket, and that gap belongs in the sum before you start.
Tell us what happened
Most contract disputes are decided by the document and the first fortnight of correspondence. Silva reads both, tells you where you actually stand, and gives you the honest arithmetic - including whether this is worth pursuing at all.