As a contract will require each party to do something (called the performance required by the contract) a breach of contract occurs where at least one party fail to perform their obligations according to the terms of the contract. Performance may relate to both the actions required of each party, and the time frame required for such actions.
Where a party has failed to perform their obligations according to the contract, the other party may assert that a breach of contract has occurred. Where one party is asserting a breach, this should be communicated to the other party as soon as practicable after the breach has become known. The other party may respond in a number of different ways to the alleged breach:
- they may acknowledge the breach and try to remedy it;
- they may dispute that a breach has occurred;
- they may argue that there is an exclusion clause or other term in the contract limiting their liability for the breach; or
- they may argue that there is an excuse for their breach, or that the contract is invalid.
Where a breach of contract is established, the aggrieved party may have the right to terminate the contract and/or seek a remedy - see Remedies for Breach of Contract. The right to terminate the contract may not always apply for every breach that occurs.
Where a breach of contract is disputed, the aggrieved party may need to take further action to resolve the dispute, such as commencing court proceedings.
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