Once the parties enter into a contract, they have to abide by the terms and provisions of the contract. If either party to the contract fails to perform the contractual obligation within the stipulated time, a breach of contract has occurred.
Types of Breach of Contract
Breach of contract can be of two types:
By an express term of contract: In some contracts, there are provisions explicitly conveying,that if certain things don’t happen, it would be considered as a breach of contract. Take an employment contract as an example, especially where serious misconduct is ground for termination. If the employee commits any misconduct which is of grave nature, then it can be rightly said that the employee has committed a breach of employment contract.
By an implied term of contract: In some contracts, the terms are not explicitly mentioned, rather it is implied. For example, the confidentiality clause in an employment contract. It is obvious for the employees to abide by the company’s confidentiality policy. If the employee leaks out any of the confidential information of the organisation, it can amount to a breach of contract.
The Australian Consumer Law applies nationally. Generally, the parties decide the terms of the contract. However, the law may also imply terms into the contract. Despite the wording of a written contract, there are some circumstances in which a Court might decide not to enforce its strict terms. In other words, you may have rights under the Australian Consumer Law. This applies to contracts made from the beginning of 2011.
Remedies for breach of contract
Once you make a contract, you will be committing a breach if you do not comply with its terms, or if you change your mind and decide not to perform your part of the contract.
If a party breaches a contract there are a number of remedies available, including:
- Punitive damages to compensate the innocent party for any loss suffered;
- A Court Order requiring the breaching party to carry out his/her obligations;
- A Court Order forbidding the party from breaching the contract; and
- A Court Order to terminate the contract and require the party who has breached it to put the innocent party in the position he/she was in before the contract was entered into.
The type of remedy and its availability would depend very much on the type of contract and the type of breach. Our contract lawyers can advise you as to the best means of dealing with the problem.
Compensation & Settlement
Sue for specific performance
The Court can Order for a “specific performance”, which directs the party that has failed to specifically carry out their contractual obligations. When the damages awarded are not adequate to the compensation for the breach of a contract, the Court directs the parties to carry out specific performance. Such Orders are generally granted for contracts involving the sale of land or involving subject matter of a unique nature, such as a rare vintage car.
Obtain an injunction
When it is impossible to recover the damage caused due to breach of contract, the Court can Order a person to restrain himself/herself from performing or repeating a wrongful act. Such Orders of the Court are referred to as an “injunction”.
Sue for damages
In the event of breach of contract, the Court generally awards damages to compensate the aggrieved party for the loss suffered (due to the breach of contract). If no substantial loss has been sustained by the injured party, then nominal damages may be awarded, recognising that a legal right has been infringed.
There are two types of damages:
Liquidated damages: If in a contract, it is explicitly mentioned that a particular amount needs to be rendered by the party at fault in the event of breach of contract, then the amount must either be liquidated or become penalty damages. Liquidated damages are nothing but an estimation of the amount that will compensate for the breach. In the event of a breach of contract, the Court will award this amount as compensation.
Unliquidated damages: When the contract is silent about the amount of damages to be awarded in the event of breach of contract, then the Court will decide the amount.
If you’re unsure about whether a breach of contract exists or need help with your case, don’t hesitate to call the Owen Hodge Lawyers team on 1800 770 780 to schedule a consultation.