I am a builder and own my own construction company. I got a contract for my company to carry out a significant amount of construction work for a private commercial warehouse business. They wanted us to construct a number of storage buildings for them. The contract was an 18 month contract.
We started on good terms and the deal was that they would pay us at intervals. However when it got to the 10th month of the contract the client decided that they wanted to cancel the project and of course stop paying us for construction work. I regard this as a breach of contract, as they have no excuse to act like this, as we have carried out the work to a high standard. I have told them that I am going to sue them for a breach of contract, but there director laughed in my face, he said it would never hold up in court, I know it can though.
My main goal is to regain all the money we have lost as a result of them quitting the project. What type of compensation can I get for breach of contract?
The Answer from Solicitors Online
Discharge of a contract
Compensation also known as damages is normally awarded in order to put a person in the same financial position they would have been if a business contract had been properly performed.
For you to receive compensation for something that happened in business or in relation to a contractual agreement. The damage you suffered must not be too remote from the cause. This is a legal principle known as Remoteness. For the damage not to be too remote from the cause the damage must fulfill one of the criteria’s below.
(a) The damage you suffered was the naturally expected result of the action that you are claiming to be the cause. This is known as a normal loss.
(b) The damage that you suffered must have been reasonably foreseeable as a possibility at the time the contract was made. It must have been probable result of the breach of contract and within contemplation of the parties at the time the contract was made. This is known as an abnormal loss.
How much compensation can you get?
There are several types of ways to measure the extent of your losses and how much you should receive in compensation. These include Expectation Interest, Reliance Interest, Restitutionary Interest, Damages for Disappointment/Injury to Feelings and Damages for Loss caused to Third Parties (Contract Rights of Third Parties Act 1999).
Expectation of Interest
Expectation of Interest is the normal measure used in business. It allows for the recovery of all the expected benefits that would have come out a business deal or contract if it was fulfilled to the level expected. Expectation of Interest also includes the loss of profits.
Reliance Interest allows you to claim for money you have wasted as a result of relying upon a business contract that you had agreed with another party.
Restitutionary Interest allows you to claim for the exact amount of money that you have paid to another party as a result of the business contract that you had in place. It is a claim to have all the money that you paid as part of the business contract returned to you.
Damages for Disappointment/ Injury to Feelings
Damages for Disappointment, also known as Injury to Feelings is compensation given for emotional hurt or mental aguish caused to a person by another. It is not normally available for breach of commercial contracts in general.
Damages for Loss Caused to Third Parties
A claim for a loss caused to a third party as the result of a breach of contract can be made. However for such a claim for compensation will only be paid only for the lowest value of the loss that was suffered by a third party, since they the third party was not a party to the business contract that was breached.
If you need legal advice online on obtaining compensation for breach of a business contract, you can speak to our Solicitors online right now.