You find yourself in a breach of contract situation and now seek help and guidance. Are you entitled to damages to compensate you and if so, how they will be assessed?
When preparing to discuss this with your Solicitor, it is helpful to have the following information available.
Damages are usually awarded to compensate for any loss suffered as a result of the defaulting party’s conduct. The purpose is to put the party suffering from the breach in the position that it would have been in had the contract been performed.
The following information is therefore helpful when you first meet your Solicitor:-
- A copy of the contract or agreement – if you have one!
In order to provide specific advice, it is important to have access to the contract and any variations (which could include emails) that have been agreed since the contract was signed.
2. What financial loss has arisen as a result of the breach?
Details about the expenses, costs, liabilities and/or loss of profits that have arisen as a result of the breach of contract will all be needed. At this stage, is helpful to make a note of as many as possible that come to mind as a consequence of the breach and further jot down how such losses and claims could be proved with supporting documents and evidence. In doing so, it is vital that steps are taken to preserve all evidence.
3. Can you do anything to mitigate the losses?
There is a duty on the party suffering a loss to take all steps to mitigate its position and to minimise the losses arising. Keeping a record of any steps taken to reduce the possible losses being incurred alongside details of any supporting evidence that could be relied upon to show that the mitigation had taken place will support your position.
4. Are any of your losses or damages remote?
The position in pursuing a claim that is too remote arises from the principle that the loss must be in the reasonable contemplation of the parties at the time the contract was made. It must therefore “flow” directly from the breach and be reasonably foreseeable.
5. Has the contract been breached due to the non-acceptance of goods or for non-delivery of goods?
If so, do you know the market value of the goods? Have this information to hand as in some circumstances where a buyer of goods refuses to accept delivered goods, refuses to pay for them or indeed where goods have not been delivered, then the damages are presumed to be the difference between the market value of the goods and the contract price.
6. Does the breach arise due to defective goods?
If yes, provide all the reasons as to why the goods are defective and any supporting evidence. Damages in this type of case generally arise to be calculated based upon the difference between the value of the goods at the time of delivery and the value of the goods had they not been defective.
7. Have you lost any management time dealing with this matter?
If it has been necessary for staff to investigate the breach and its consequences, it may be possible to recover that particular staff member’s wages. This can be difficult to prove and will only arise in exceptional circumstances. It is however worthwhile keeping a note of the loss of management time in any event as it can also help focus your mind and also provide information as to the actual cost of the dispute as the case proceeds. This may be a relevant factor when considering the best alternative to Court Proceedings and during the course of negotiations.