A breach of contract letter means someone claims you failed to meet your obligations under an agreement — written or verbal. Before you respond, you need to understand whether there actually was a valid contract, whether you did breach it, and what damages they could realistically claim.
A contract is breached when one party fails to fulfil their obligations without a valid legal reason. This might be: failing to pay, delivering work late or not at all, providing substandard goods or services, or terminating a contract early. To be enforceable, a contract needs: an offer, acceptance, consideration (something of value exchanged), and an intention to create legal relations. Verbal contracts can be valid, but are much harder to prove. The letter you've received is likely a 'letter before action' — the first formal step before court proceedings. The claimant must generally prove their loss was caused by your breach and that they took steps to minimise it.
Was there a valid written contract? Read every clause. Does the alleged breach actually apply to your situation? What does the contract say about remedies and dispute resolution?
Were there force majeure clauses? Did the other party's own breach make your performance impossible? Did they vary the terms? These can all be defences.
Contract damages must be proven, not assumed. The claimant must show their actual loss. If they're claiming £50,000 but you believe the real loss is much less, challenge their figures.
Even a brief acknowledgement stating you're taking advice is better than silence. Set out your position clearly — whether you accept, deny, or partially accept the claim.
Most contract disputes settle before court. If there's some validity to their claim, a settlement now avoids the cost, time, and uncertainty of litigation.
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Yes, verbal contracts are legally valid in England and Wales. The difficulty is proving what was agreed. Evidence such as emails, texts, witnesses, and conduct can help establish the terms.
Typically: the loss that was caused by the breach (expectation damages), or the cost of getting back to the position before the contract (reliance damages). Damages for inconvenience and distress are limited in commercial contracts.
Many contracts include a 'force majeure' clause covering unforeseeable events. Even without one, the doctrine of 'frustration' may apply if performance became truly impossible. This is a legal argument best made with advice.
In England and Wales, the Limitation Act gives 6 years from the date of breach for a simple contract claim, or 12 years for contracts made as a deed. After this period, the claim is time-barred.
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