What is a claim for breach of contract
An integral component of any dispute relating to a contract is a determination of whether or not there has been a breach of the terms of that contract. A breach of contract can be described as a "failure to observe the terms of the contract", so that one party has failed to perform a duty under the terms of the contract. Most breaches of contract fall either into the category of an actual breach, or else a anticipatory breach. An actual breach will occur when something has gone wrong and the contract is in some way unfulfilled. An anticipatory breach, on the other hand, will take place when one party to the contract makes it clear that they are unable to fulfil their side of the agreement going forward. The impact that a breach of contract will have on an agreement will depend on the terms of the contract, and the severity of the breach. On the extreme end there are contractual term that are critical to the contract in question, and a breach will call the whole thing into question . Such a situation would be described as constituting a repudiatory breach. Ordinarily, the part of a contract that is broken does not go to its foundation, and the agreement may continue in operation, in which case the breach will constitute a minor breach or "non-repudiatory". In such a case the non-breaching party will be able to keep the contract in operation, although they can claim damages in order to get some financial remedy for what has occurred. In practice, minor and major breaches will not always be cut and dry, and there may well be some grey area between them. In such a situation it is best to get legal advice, as this will give the aggrieved party the best chance of being able to identify how to proceed. Taking early steps can help avoid a future dispute and can often lead to a resolution amicably. A solicitors letter of intention will often act as a very effective means of getting a response, and doing so as soon as possible is therefore always the recommended course of action.
The purpose of a letter before action
At this stage we simply need a brief paragraph setting out the purpose of a letter before action. We can easily tweak that paragraph to fit the remainder of your blog post. Where you are seeking to resolve a dispute relating to a breach of contract a letter before action may be an important tool. A letter before action has two purposes. First and foremost it acts as formal notice to the recipient of the dispute and importantly the nature of that dispute. This may well become relevant if court proceedings are subsequently required. Secondly, where it is written in suitable terms it may yet prove to be a final opportunity to resolve the matter without recourse to litigation.
What you need to include in a letter before action
The key elements that should be included in a breach of contract letter before action are:
- Identification of the Breach: The letter must identify exactly which contractual obligations have not been met and the extent to which those obligations have not been met. It may be acceptable to simply refer to a provision in a contractual document however the more detailed provision is given, the stronger the letter will be.
- Supporting Evidence: The letter should refer to supporting evidence. For example, this might include a reference to a encouraging email trail, photographs or quotations. An opinion from an expert might also be evidenced in the letter. The clearer the picture for the reader of your letter (the recipient’s legal advisor), the more powerful your letter will be.
- Demand for Remedy: Without pre-judging a question of quantum, the letter should make clear what you are seeking as resolution of the problem. It is good practice to refer to a reasonable timescale within which you expect the recipient to remedy the situation. Comments referring to "use it or lose it" scenarios are especially useful in clarifying that a party’s rights must be exercised promptly so as to avoid prejudice to the other.
- Deadline for Response: In order to ensure that a dispute is dealt with efficiently, it is important to include a deadline by which you expect a response. The deadline can be amended to suit the circumstances of each case. For example, it might be appropriate for a deadline to be shortened to 5 or 7 days where that would be acceptable to the recipient. In some circumstances, 28 days is appropriate. The limitation period for bringing a claim will almost always fall outside that timeframe.
The law and compliance
When considering a Contractual dispute and the possibility of sending a solicitor’s Letter Before Action to your opponent, there are a number of legal considerations to keep in mind when drafting your letter.
1. Contractual Terminology
Your contract may require that you meet specific requirements before commencing proceedings. If so, these must be followed. For example, parties investing time and money into litigation want certainty. If the contract required that the matter be submitted to binding arbitration before commencing court proceedings, you must comply with this. If you do not, the court may not give effect to the arbitration clause and may not grant you the remedy you seek.
Further, a contract may state that a matter must be submitted to a particular court in a particular jurisdiction. If you fail to comply with this, your jurisdiction may be challenged by your opponent.
2. Limitation Periods
Most litigation has a statute of limitations based on the type of claim and the facts. You must always ensure that you comply with a statute of limitations. Sending a letter before action may sometimes stop the clock running on a limitation period, but it does not necessarily suspend it. Statute of limitations issues are very fact-sensitive, so it is important to consult a lawyer.
3. Fact vs. Legal Issues
A key preliminary question is whether the dispute between the parties is a factual issue or a legal one. The essential point in deciding whether to send a letter before action may be whether the matter is a factual or legal issue. A letter before action is not appropriate if no substantive review can be made of matter before the issue of the letter before action.
4. Facts to be Accepted
Usually, a letter before action will refer to facts which are accepted as true. For example, if there is a contract signed by both parties, it is reasonable to assume that a court will accept this in making a preliminary determination when deciding whether to give effect to the letter before action.
5. Jurisdiction
A letter before action may refer to legal issues more than a factual issue. Why? Because a court cannot hear a case where it has no jurisdiction. This is important for those who wish to avoid a court that appears biased towards a particular outcome. A party may choose to send a letter before action to avoid a court that he believes will give them a particular ruling.
It is important to note, however, that the benefits of a letter before action are not available in every jurisdiction. In many judicial systems, including England and Wales, letters before action have no binding effect.
Example letter before action for breach of contract
The following examples are not exhaustive, but rather a brief demonstration of the sort of elements that may be contained in a breach of contract letter before action.
A Demand for Payment
I write further to my letter of [Day Date] and enclose your cheque of [£] which will be returned in accordance with the terms and conditions agreed between us. I am disappointed that you have failed to carry out the terms of the agreement that we have entered into. If the payment of [£] is not received by [date], I will be obliged to issue proceedings against you without further notice.
A Demand for Performance
I write further to my letter of [Day Date] and note that you have failed to supply me with the [provide details] which you agreed to do by [Date] . Accordingly, I give you notice to comply with the terms of the contract that we have entered into by [date]. If you fail to comply with this notice I will be obliged to issue proceedings against you without further notice.
A Demand for Rescission
I write further to my letter of [Day Date] and note that you are in breach of our contract dated [date]. I have duly cancelled our contract by notice on [date] as per the terms of the contract and I require you to arrange for delivery of [insert details] to me by [date]. If you fail to do so I will have no alternative but to take legal action against you.
There is no mandatory definition of what constitutes a Breach of Contract Letter Before Action, however the examples above provide a framework that should be used when writing a pre-litigation letter.
Top tips for letters before action
It is important that the letter before action effectively communicates the client’s position and sets out why legal action is being threatened. It should be written in plain language and the message should not be obscured through unnecessary legal jargon. The letter should set out why a breach of contract has taken place, what other remedies are available to the client and why they have chosen to proceed with litigation. The tone of the letter should reflect this.
The sender should take an objective view of the letter. If they were the recipient, would they find it helpful? Has everything which needs to be said been included? Does it explain why legal action is being threatened? Does it encourage the other party to respond? Is it clear what is being said?
Whilst it is important that the letter before action sets out the client’s position clearly, it should also be factual, professional and proportionate. When writing a letter before action, lawyers should be careful to not jeopardise their client’s position in any future legal proceedings. This is known as "drive-bys"; where the other side can rely on something the lawyer has said in correspondence or in court in such a way as to undermine their client’s position.
A good tip is to always try to avoid using the phrase "without prejudice and subject to costs". This is usually used in the context of settlement negotiations in litigation. It provides limited protection but is often misunderstood. This can cause significant problems. A better phrase is "in the alternative". This gives protection against something being used in evidence in future litigation but at the same time, leaves the door open at this stage for a negotiated settlement. More importantly, it does not bring the client’s position into question in future litigation.
When to seek legal advice
A breach of contract letter before action may not always be the best strategy. For instance, such a letter may do more harm than good in some cases. Given this, it is often sensible to seek legal counsel before sending such a letter – particularly if there are signs that the dispute could end up in Court.
It makes sense to involve a legal professional in the drafting of a breach of contract letter before action if you are concerned about the potential for escalation of an ongoing dispute – perhaps it is already ongoing. This would be especially so where you feel as though your claim has been ignored. Due to the lack of response, you may believe that the other party is unwilling to negotiate, making them likelier to defend their position tooth and nail.
In any such situation, speaking with a solicitor (or applying for legal aid in criminal and family cases) will help affording you protection from the consequences of acting on your own behalf. Specialist quality advice can also be useful for informed decision-making regarding whether to proceed with legal action , what form such action should take, and how to deal with a case once it is entered.
By consulting a legal expert, you can also learn a great deal about process, and what work is likely to be necessary to resolve your dispute. Not only this, advice on relevant legal and legislative provisions can help you in constructing a watertight contract or agreement, which is very likely to allow for the minimisation of risk in the course of your commercial dealings in the future.
Legal aid may be able to help you with your breach of contract claim if you meet the criteria, including if your dispute relates to homelessness, rent arrears possession, social security or care proceedings, debt advice and other related issues.
However, it is worth noting that you will not usually be able to fund a breach of contract claim outside such categories yourself, as the Legal Aid Agency does not issue legal aid certificates in cases in which costs are likely to be covered by successful litigation.