Every day, people and businesses engage in written and verbal commercial contracts, ranging from shopping at a supermarket, purchasing a car, or signing an employment contract. But what happens when a Commercial Contract is breached?
Are Verbal Contracts Legally Binding?
Some people believe verbal contracts are not legally binding. In fact, a verbal contract is legally binding, but it can be difficult to prove the terms especially when one party disputes the terms. The Court will be persuaded by documents i.e. emails/ letters/ SMS / WhatsApp messages/ diary entries recording the terms of the verbal contract rather than a person’s recollection of the terms of a verbal contract.
For a written and verbal commercial contract to be valid, you need to prove 4 key parts: (1) there needs to be an offer (2) an acceptance of that offer (3) consideration for the offer (4) intention by both parties to create a legal relation.
If you are seeking to establish that a verbal contract was reached, then the burden rests with you to prove the terms of the verbal commercial contract.
When does a Breach of Commercial Contract Occur?
A contract breach takes place when a party – either an individual or a business – fails to fulfill some or all of its responsibilities as specified in the commerical contract. If this occurs, the innocent party is entitled to damages as compensation.
What Actions Can You Take if a Commercial Contract is Breached?
The courts may offer various remedies for a commercial contract breach:
- Monetary Compensation: If there’s a breach of contract, the affected party may be awarded damages for the failure to uphold the contract. In case of a condition breach, the aggrieved party can terminate the contract and claim losses through damages, while in case of a warranty breach, they may only claim damages.
- Specific Performance: This remedy requires the breaching party to fulfill an obligation that should have been part of the commercial contract.
- Rescission: If misrepresentation, duress, mistake, or undue influence led to forming a contract, it can be nullified and both parties are returned to their pre-contract positions.
- Rectification: This remedy deals with correcting errors made in recording written contract.
Seeking legal advice from an experienced contract solicitor is crucial during these situations.
What is Unjust Enrichment?
Unjust enrichment occurs when someone benefits unfairly at others’ expense. Claims based on unjust enrichment follow the law of restitution, which requires payment equivalent to any benefits one might have gained from breaking a contract.
What Preliminary Steps Should I Take Before Seeking Legal Advice?
If your commerical contract was documented:
- Locate a copy of the entire document for evidence purposes demonstrating both parties’ obligations.
- Record any variations in the written contract – date changes for delivery, service start date, or payment adjustments.
If your commercial contract was verbal:
- Write down as much information as possible about the discussed terms, including who said what, when, and where.
- Determine if any witnesses were present or if any aspect of the contract was communicated through email, social media, or phone messages.
Gathering the key documents at an earlier stage will assist in presenting your case in a clear and persuasive manner. For consumers and businesses, we offer a number of funding arrangements for breach of contract claims such as Fixed Legal Costs Litigation.
Parties involved in a contract dispute should consider whether early mediation is a possibility to negotiate a settlement. Mediation can be highly successful. For more information, read our blog Mediation and Alternative Dispute Resolution (ADR).
Still not convinced? Read some of our business client’s success stories and testimonials on how they settled their business disputes using our legal service.