Disputes concerning contracts are at the heart of the majority of commercial disputes.
A contract arises where two or more parties have exchanged promises [known as "consideration"!] and which the law will enforce. There are a number of ingredients required to create an enforceable contract.
Offer: An offer is an indication made by one party of their intention to enter a contract on particular terms. At its simplest this may be a price tag on an item for sale in a shop. At the more complex end this could involve a detailed contract formally entered into after extensive negotiation.
Acceptance: Acceptance occurs when the second party indicates they will proceed on the basis of the offer. In the examples set out above this might amount to paying for the item in the shop or signing the detailed contract. It can sometimes be difficult to identify the moment at which offer and acceptance becomes a binding agreement.
Certainty: It is not usually necessary for a contract to be in writing in order for it to be enforceable [contracts relating to land are an important exception to this rule] but it is necessary for the terms of the contract to be clearly understood - otherwise a court may conclude that the contract is void for uncertainty.
Consideration: The English courts will not as a general rule [there are important exceptions] enforce a unilateral promise. An enforceable contract comes into place when each party provides some "consideration". A court will wish to examine that consideration amounts to something of benefit to the other party - but the court will not examine "sufficiency" of consideration. In other words it is not part of the court's function to determine whether each party made a good or bad bargain.
Remedies for breach of contract: A party may break a contract in a whole variety of ways - for example making a material misrepresentation before the contract was entered into. Performance of a contract may be "frustrated" [for example a contract for service where the party providing the service becomes too ill to perform their allotted task] as well as the more usual disputes concerning for example the quality of goods and services delivered.
If a court makes a finding that breach of contract has occurred the Judge has a number of potential remedies available:
- Injunction [for more detail see separate briefing note on this site]
- Specific performance. A court has the power to direct one party to fulfil their contractual obligation. This is a discretionary remedy and used sparingly by the courts.
- Damages [monetary compensation]. The court will examine what losses have been suffered as a result of breach of contract and may make an award of damages based upon this.
We are able to offer a specialist and inter disciplinary approach.
The innocent party is expected to "mitigate" or minimise their loss and not all losses may be recoverable. We are able to provide specialist advice.