There are always consequences to breaching a contract, or agreement. This notice allows you to assert your rights when the other party has breached the contract.

Can I terminate for breach?

In some instances, the contract will outline the consequences of a breach. It may outline a procedure for the breach to be remedied. Generally, this will take the form of the wronged party providing notice to the party in breach, and when the party in breach has not remedied the breach after a certain period, the wronged party will have a right to terminate. A termination right may only be available for certain kinds of breaches.

Where the contract does not provide such a procedure, the wronged party is still legally entitled to demand that the breach be remedied, generally within a reasonable amount of time. A right to terminate may exist depending on the circumstances. Depending on the nature of the contract, certain obligations may be considered essential, or conditions, and any breach of them will create an immediate right of termination under common law. Then there are clauses that courts consider warranties, which give no right to terminate upon breach, and intermediate terms, whether the right to terminate depends on the seriousness of a breach. If you are unsure what category a particular clause falls under, we recommend seeking legal advice.

Generally, a clear contractual procedure will override common law rules.

Where the contract provides for an immediate right of termination, it may be more appropriate to use the Notice to Terminate Contract.

Where the breach is signficant and you are considering legal action, the Letter of Demand (1st attempt) may be more approriate.

Am I entitled to compensation for a breach of contract?

Generally, a wronged party is entitled to be compensated for the damage caused by the other party's breach, whether or not the other party later remedies the breach. In some instances, the contract will provide for compensation, either through a lump payment prescribed for certain breaches, known as liquidated damages, or in-kind compensation, such as through a free additional order.

Parties are entitled to compensation even where the contract does not provide for it. This compensation will generally account for the financial damage incurred by the wronged party, and will be enforced by the courts according to common law. You should take great care when making such claims, for they may antagonise the other party or lead to a repudation of the contract. We recommend speaking to a lawyer if you are unsure.