Breach of contract: your rights, the remedies and the time limits

What counts as a breach

A contract is broken when one party fails to perform an obligation it contains, without a lawful excuse. Late delivery, delivery of the wrong thing, non-payment, a service done badly, a refusal to go on: each is a breach if the contract required otherwise. The first question is always what the contract required, and business owners are regularly surprised by the answer, because the terms on the back of the order were never read or the arrangement was agreed by email and has to be pieced together from the correspondence.

Not every failure is a breach. A contract may permit a delay, allow substitution, or excuse performance in defined events, and a party who exercises a right the contract gives it has not broken it. A party prevented from performing by the other side's own default is usually excused too. So the starting point is the wording, the written terms incorporated into it, and the terms the law implies into contracts of that type, such as the requirement in a contract for services that they be carried out with reasonable care and skill.

Our guide to commercial contracts covers how terms get into a contract in the first place. This guide assumes a contract exists and something has gone wrong under it. The law described is that of England and Wales; Scots contract law differs on several of these points, including the rules on ending a contract for breach.

Conditions, warranties and innominate terms

The law sorts contract terms into three kinds, and the sorting decides what the innocent party can do.

A condition is a term that goes to the root of the contract. Breach of a condition entitles the innocent party to terminate the contract and claim damages, however small the actual consequence of the breach. Time of delivery in a commercial sale is usually a condition. A term may also be made a condition by the contract saying so in plain words.

A warranty, in this sense, is a lesser term. Breach gives the innocent party damages but no right to end the contract. A promise about a minor specification, or an obligation to provide a monthly report, is likely to be a warranty.

An innominate term is one that could be broken in a serious way or a trivial way, and the law waits to see. If the breach deprives the innocent party of substantially the whole benefit of the contract, they may terminate; if it does not, they are left to damages. Most obligations in a commercial contract fall into this category, and this is why two businesses can look at the same failure and reach honest, opposite views on whether the contract can be ended.

The practical consequence is that a party who terminates for a breach that turns out to be minor has itself committed a breach by walking away. This is the most expensive mistake in contract disputes and it is made by people who were in the right until the moment they acted.

Repudiation and affirmation

A repudiatory breach is one serious enough to allow termination: a breach of condition, a serious breach of an innominate term, or a clear statement by one party that it will not perform at all. The last of these is an anticipatory breach, and the innocent party can accept it and terminate before the date for performance arrives.

A repudiatory breach does not end the contract by itself. The innocent party has a choice: accept the repudiation and bring the contract to an end, or affirm the contract and hold the other side to it. The choice has to be communicated, and it has to be made within a reasonable time. A party who knows of the breach and carries on as though the contract continues, taking deliveries, making payments, issuing instructions, may be found to have affirmed it, and once affirmed the right to terminate for that breach is gone. Damages for the breach remain.

The safe course, where a serious breach has happened and the innocent party has not decided what to do, is to reserve the right to terminate in writing and do nothing that looks like treating the contract as alive in the meantime.

Many contracts contain their own termination clause, allowing termination on notice for a material breach not remedied within a stated period. It runs alongside the common law right, and the notice it requires is usually specific, so a termination that does not follow it may fail.

What damages are meant to do

Damages for breach of contract are compensatory. The usual measure is the expectation measure: the sum that puts the innocent party in the position it would have been in had the contract been performed. If a supplier fails to deliver and the buyer has to buy elsewhere at a higher price, the damages are the difference. If a customer refuses to pay, the damages are the price, less what the supplier saved by not having to complete.

Three rules cut the figure down.

Remoteness. A loss is recoverable only if it arose naturally from the breach or was within the reasonable contemplation of both parties, at the time the contract was made, as the probable result of a breach. A loss that depends on facts the other side knew nothing about, such as an unusually profitable resale contract that was never mentioned, will generally be too remote.

Mitigation. The innocent party must take reasonable steps to reduce its loss and cannot recover loss that those steps would have avoided. A buyer who sits for six months before buying replacement goods in a rising market will not recover the whole of the increase. The duty is to act reasonably, and the cost of reasonable mitigation is itself recoverable.

Causation. The loss must have been caused by the breach. Where the business would have lost the money anyway, or the real cause was something else, the damages fall away.

Two further points recur. Contracts often contain a clause capping liability at the contract price or excluding loss of profit, and such a clause is generally enforced between businesses where it is reasonable. And a claim for lost profit needs evidence: management accounts, the pipeline that was lost, the margin on it.

Specific performance and injunctions

Damages are the default remedy, and the court orders a party to perform the contract only where damages would be inadequate. Specific performance is an order to do what was promised, and it is the usual remedy for a contract to sell land, because each piece of land is unique. It is rarely ordered for the supply of ordinary goods or services, because money buys a substitute, and it is never ordered for a contract of personal service, because the court will not supervise somebody forced to work.

An injunction is an order to stop doing something, and it is the remedy for breach of a negative obligation: a restrictive covenant, a confidentiality clause, an exclusivity term. An interim injunction can be obtained quickly, before the merits are decided, where the claimant shows a serious issue to be tried and that the balance of convenience favours holding the position. The claimant has to give a cross-undertaking to compensate the other side if the injunction turns out to have been wrongly granted, and that undertaking is a real liability.

Both remedies are discretionary, and a party who has delayed or could easily be compensated in money will be left to damages.

How long you have to bring a claim

Section 5 of the Limitation Act 1980 provides that an action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued. For a breach of contract that date is the date of the breach. The date the loss was discovered makes no difference. A claim issued a day late is met with a complete defence, however strong it is.

Section 8 gives twelve years for an action on a specialty, which for practical purposes means a contract executed as a deed. Many guarantees, leases and some settlement agreements are deeds, and the longer period is one reason lenders and landlords insist on that form.

The period can be extended by agreement in a standstill agreement, and it restarts in a debt claim where the debtor acknowledges the debt in writing or makes a part payment. Where a claim is close to the limit, issuing protective proceedings and asking the court to stay them while the parties talk is safer than negotiating past the date.

The steps the court expects before a claim

The Practice Direction on Pre-Action Conduct and Protocols applies to contract disputes that have no specific protocol of their own, and the court expects it to have been followed before a claim is issued. The party who ignores it can be penalised in costs whatever the outcome, and can lose interest on the sum recovered.

The claimant writes a letter before claim setting out the basis of the claim, a summary of the facts, what the claimant wants and, where money is claimed, how it is calculated. The defendant is given a reasonable time to respond: the Practice Direction says 14 days in a straightforward case and no more than three months in a very complex one. The response should say whether the claim is accepted, and if not, why, which facts are disputed and whether there is a counterclaim. Both sides should disclose the key documents.

The parties are then expected to consider settling without proceedings. Mediation, early neutral evaluation and negotiation are all named, and the Practice Direction says that litigation should be a last resort. A party who is silent in response to an invitation to mediate, or refuses without a good reason, can be ordered to pay additional costs even if it wins.

The court assesses compliance in substance and overlooks minor slips. The letter has to be sent, it has to be clear, and the other side has to be given time to answer it. Our guide to commercial disputes takes the process on from here through issue, allocation and trial.

If your business is the one accused

A letter before claim accusing your business of breach deserves a considered response inside the period it gives. Start with the contract, and read the whole of it. The clause the other side has quoted is one part of a longer document. Check whether the obligation is as described, whether a limitation or exclusion clause applies, whether the other side performed its own obligations, and whether any notice or claims procedure in the contract was followed.

Then look at the loss claimed. Ask for the documents that support each figure, what the other side did to mitigate and when, and whether the loss was of a kind the parties contemplated when the contract was made. A large claim for lost profit is frequently a much smaller one once those questions are answered, and asking them in the response is the cheapest form of defence available.

Check the date of the alleged breach against the six-year limit, and check whether your own business has a counterclaim. Do not ignore the letter, and do not respond in anger. The letter and the response are the first documents the court reads if a claim is issued, and both sides are judged on them. A short, factual response that engages with the allegations and proposes a conversation is far more useful than a dismissal.

When to settle

Most breach of contract disputes settle, and the useful question is when. Costs climb at issue, disclosure and trial, so the cheapest settlements happen after the letters have been exchanged and before proceedings.

The court fee alone focuses minds. On the civil court fees list updated on 13 July 2026, issuing a money claim between £10,000 and £200,000 costs 5% of the value of the claim, and a claim over £200,000 costs £10,000. Legal costs then exceed the fee many times over, and the winner recovers a proportion of them from the loser, rarely all.

A Part 36 offer is the tool that shifts risk. It is a written offer to settle, open for a relevant period of at least 21 days, made under Part 36 of the Civil Procedure Rules. A claimant who refuses a defendant's Part 36 offer and then fails to do better at trial pays the defendant's costs from the end of the relevant period. A defendant who refuses a claimant's offer and then loses by at least that much pays interest on the damages at up to 10% above base rate, indemnity costs, and an additional amount of 10% of the first £500,000 of damages. A well-judged offer early in the dispute is often what settles it.

The decision to settle is commercial. It weighs the strength of the case, the recoverable sum against the cost of getting it, whether the other side can pay a judgment, and the management time the dispute will absorb. The moment to reach a settlement is usually earlier than either side thinks.

Frequently asked questions

Can I end a contract because the other side broke it?

Only for a serious breach. Breach of a condition, or a breach of an innominate term that deprives you of substantially the whole benefit of the contract, entitles you to terminate and claim damages. Breach of a lesser term gives damages only, and a party who terminates for a breach that turns out to be minor has itself broken the contract. Check whether the contract has its own termination clause and follow its notice requirements, and reserve your rights in writing while you decide.

How are damages for breach of contract calculated?

On the expectation measure: the sum that puts you in the position you would have been in had the contract been performed. From that figure the law deducts loss that was too remote, meaning outside what both parties could reasonably have contemplated when the contract was made, and loss you could reasonably have avoided by mitigating. Any limitation or exclusion clause in the contract is applied on top. Lost profit has to be proved with accounts and evidence of the work that was lost.

How long do I have to claim for breach of contract?

Six years from the date of the breach for a simple contract, under section 5 of the Limitation Act 1980, and twelve years under section 8 where the contract was executed as a deed. Time runs from the breach, and the date you discovered the loss makes no difference. A standstill agreement can extend the period by consent, and in a debt claim a written acknowledgment or a part payment restarts it. Where the date is close, issue protective proceedings first and negotiate afterwards.

What is a letter before claim?

It is the letter the Practice Direction on Pre-Action Conduct expects a claimant to send before issuing proceedings. It sets out the basis of the claim, the facts, what is wanted and how any sum is calculated, and it gives the defendant a reasonable time to respond, which the Practice Direction puts at 14 days in a straightforward case and no more than three months in a very complex one. A claimant who issues without sending one, or a defendant who ignores one, can be penalised in costs.

What is affirmation and why does it matter?

Affirmation is treating the contract as continuing after you know of a breach that would have allowed you to end it. Once you have affirmed, by carrying on with deliveries, payments or instructions as though nothing had happened, you lose the right to terminate for that breach, though you keep the right to damages. It matters because the decision to terminate has to be made within a reasonable time, and silence plus continued performance is read as a decision to keep the contract.

Can I force the other side to perform the contract?

Rarely. The court orders specific performance only where damages would be inadequate, which is usual for contracts to sell land and unusual for ordinary goods or services, because money buys a substitute. Contracts of personal service are never enforced this way. An injunction is available to stop a breach of a negative obligation such as a confidentiality or exclusivity clause, and can be obtained on an interim basis, but you will have to undertake to compensate the other side if it turns out to have been wrongly granted.

What is a Part 36 offer?

A written offer to settle made under Part 36 of the Civil Procedure Rules, open for a relevant period of at least 21 days, with automatic costs consequences if it is refused. A claimant who fails to beat a defendant's offer at trial pays the defendant's costs from the end of the relevant period. A defendant who fails to beat a claimant's offer pays enhanced interest at up to 10% above base rate, costs on the indemnity basis and an additional 10% of the first £500,000 of damages. It is the main lever for settling a contract claim.

Sources & further reading

• Limitation Act 1980, section 5
• Limitation Act 1980, section 8
• Practice Direction on Pre-Action Conduct and Protocols
• Civil Procedure Rules, Part 36
• GOV.UK: civil court fees (EX50)

This article is general information, not legal advice. The law changes and depends on your circumstances — always take advice on your specific situation before acting. Last reviewed 22 September 2026. AD Solicitors Limited is a recognised body regulated by the SRA (no. 8011228).