Quantification of losses for breach of contract

A breach of contract can broadly be described as the failure to comply with any term of an agreement; some examples include a refusal to perform, incomplete performance, delay or unlawful termination.  Once it has been determined that a breach of contract has in fact occurred, the next question is how to determine the resulting loss and whether it can be recovered from the responsible party.  Whilst there is no hard and fast rule when attempting to quantify losses, there are certain principles which form part of the process of  assessing damages caused by a breach of contract.

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How not to terminate a contract for non-payment

Non-payment, or habitual late-payment of invoices by customers can impose real costs on suppliers, and put serious strain on the supplier-customer relationship.  In many cases a supplier will terminate, or threaten to terminate the contractual relationship with the customer unless payment is made.   Although non-payment of invoices can justify termination of a contract, if the contract contains a particular mechanism for termination – such as requiring a written notice threatening termination to be given, and the contract can then be terminated if payment has not been made within X number of days – it is vitally important that that process be scrupulously followed, otherwise the supplier may expose themselves to significant liability. [Read more…]

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