When a contract has been broken

The vast majority of business disputes are based on a contract. Someone agreed to supply goods, do some work or pay some money, and they haven’t done it or haven’t done it properly, so the questions are what the contract says, what was broken, what it has cost you and whether the other side is worth pursuing.

I draft and review contracts, but I don’t run contract disputes. That work goes to colleagues at Nexa Law who litigate every day. If you send me the details, I’ll read them, work out who is the right person given the size and type of claim, their capacity and their pricing, and introduce you. They act for you from there and quote their own fee. There’s more about my Nexa colleagues here.

What counts as a breach

A contract doesn’t have to be a signed document. It can be an order and an acceptance by email, a quote someone said yes to, or terms on the back of an invoice (though whether those were ever agreed is a common argument in itself). Where the paperwork is thin, the law fills in some of the gaps. Between businesses, the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982 imply terms about quality and reasonable care and skill, and where a business sells to a consumer, the Consumer Rights Act 2015 does a similar job.

The usual breaches are non-payment, late or non-delivery, goods that aren’t of satisfactory quality, and services done badly. Whether the breach lets you end the contract, or only claim damages, depends on how serious it is and what the contract says about termination. People often get this wrong, and ending a contract when you weren’t entitled to can put you in breach instead, so it’s worth taking advice before you send an email saying that you’re terminating.

What you can claim and how the contract may limit it

The basic aim of damages is to put you in the position you’d have been in if the contract had been performed, which may well be less than everything you’ve lost. The loss has to have been caused by the breach, it mustn’t be too remote, and you’re expected to take reasonable steps to keep it down.

The contract itself may also limit what you can claim. Limitation and exclusion clauses can cap a claim or remove whole categories of loss, and they’re often enforceable between businesses, so a litigator on either side will look for them at the outset. I’ve written about a case where a strong £7m claim came to nothing because of one.

Time limits

A claim for breach of an ordinary contract must be brought within six years of the breach (section 5 of the Limitation Act 1980), and if you miss that date the claim is lost whatever its merits. Contracts sometimes shorten the period for notifying claims, particularly warranty claims after a business sale, so read the contract as well as the Act. There’s more in my article on how long you have to sue for breach of contract.

The usual process

It starts with a letter of claim setting out what’s alleged and what you want. The court’s Practice Direction on pre-action conduct expects the other side to be given a reasonable time to respond (14 days in a simple case, up to three months in a very complex one), expects documents to be exchanged, and expects both sides to consider settling. A party who ignores all that can be penalised in costs later.

If it doesn’t settle, a claim is issued and the court allocates it to a track by value. Under Part 26 of the Civil Procedure Rules as they stood in October 2026, the small claims track takes claims up to £10,000, the fast track up to £25,000 and the intermediate track up to £100,000, with the multi-track for anything bigger or more complicated. The track is important because it governs how much of your legal costs you can recover if you win. On the small claims track you generally recover very little, which is why many businesses run those claims themselves, and my small claims guide covers how to do that.

Most claims settle at some point along the way, and only a small number go all the way to a trial.

What to send

• The contract, terms and conditions, or the emails that make up the deal
• Invoices, and a note of what’s been paid
• The key correspondence about the problem
• Your estimate of the loss, and anything you know about the other side’s ability to pay

If your problem is simply an unpaid invoice that nobody disputes, the debt recovery page is the better starting point.

Next steps

Send me the details, including any deadline you’ve been given, and I’ll tell you who at Nexa should be looking at it.