Breach of contract and remedies (UK): minor, material and anticipatory breach explained

If you think you or the other party have breached a contract, the first question is what kind of breach it is. UK law recognises three main kinds, and the remedy you are entitled to depends on which one has occurred. This article explains what a breach of contract is, the difference between a minor, material and anticipatory breach, and the practical remedy for each.

What is a breach of contract?

A breach of contract is when one of the parties to a contract does not do what they were supposed to do under it. When a contract is breached, the innocent party, meaning the party that has suffered from the breach, is entitled to a remedy. The remedies are covered further down, but the short version is that the remedy depends on how serious the breach is.

Before entering into a contract, I always advise clients to read it carefully and make sure their own obligations are very clear and narrow in scope. That way they avoid breaching the contract themselves, whether willingly or unwillingly. A lot of breaches happen simply because a party did not fully understand what they had signed up to, or agreed to obligations that were wider than they realised.

Types of breach of contract (UK law)

UK law recognises three main kinds of breach of contract: a minor breach, a material breach and an anticipatory breach. I always advise clients to first understand which kind of breach has occurred, because this determines the kind of remedy they may be entitled to.

What is a minor breach of contract?

A minor breach is a small breach of the contract. It has occurred, but it still allows the contract to be fulfilled. An example is a service provider delivering their services a few days late, where the customer is not hugely affected and timing was not really important to the deal. The customer still gets what they paid for, just not quite as agreed.

What is a material breach of contract?

A material breach is a breach that goes to the root of the contract. An example is a service provider who has agreed to do something and does not do it at all. The other party is not getting what they contracted for, and the purpose of the contract is defeated.

What is an anticipatory breach?

An anticipatory breach is a breach that has not yet occurred, but one of the parties believes it will occur in the future. An example is a customer who comes to you, tells you they have received your invoices, but says that for cash flow reasons they cannot yet pay. Nothing is overdue yet, but you have been told that a breach is coming, and that changes how you should respond.

Remedies for breach of contract

Once you know which kind of breach you are dealing with, the remedy follows. The three remedies below match the three kinds of breach.

Notice to rectify a minor breach

For a minor breach, such as a service provider being a few days late, you might want to send them a legal notice requesting that they fix or rectify the breach. This gives the other side a clear chance to put things right, and it creates a written record that you raised the problem and gave them the opportunity to fix it.

If your notice is not complied with within a reasonable amount of time, the minor breach may become a material breach of the contract. In other words, a small problem that is ignored can grow into a serious one, and the remedies available to you grow with it.

Damages for a material breach

For a material breach, such as the service provider not doing what they agreed to do, you may be entitled to damages. Damages can include:

• loss of profits caused by the breach;
• loss of time; and
• the cost of remedying the issue, for example paying someone else to do the work that was not done.

The aim of damages is to compensate you for what the breach has actually cost you, so it pays to keep records of every loss from the moment the breach occurs.

Dealing with an anticipatory breach

For an anticipatory breach, you may not be automatically entitled to damages. In any case, it is always best to avoid the courts. So if you anticipate, or believe, that a breach of contract will occur in the future, my advice is to contact the other side, notify them of the possibility and work out a way to resolve the issue before it even arises.

Using the cash flow example, that might mean agreeing a revised payment date or a payment plan while the relationship is still workable, rather than waiting for the invoice to go unpaid and then starting a dispute. A conversation now is almost always cheaper than a claim later.

Duty to mitigate your losses

One final point applies whichever kind of breach you are dealing with, and it catches people out. If you intend to claim damages through the courts, the courts will expect you to have taken proactive measures to mitigate your losses. Mitigating your losses means taking actions that reduce the amount of loss you will incur or have already incurred.

So you cannot simply let the losses mount up and then present the other side with the bill. If there were reasonable steps you could have taken to limit the damage, such as finding a replacement supplier promptly, the court will expect you to have taken them.

Next steps

If a contract has been breached, start by identifying whether the breach is minor, material or anticipatory, because that decides what you can do about it. Gather the contract and the evidence of the breach, take reasonable steps to limit your losses, and then act: a notice to rectify, a conversation to head off an anticipated breach, or a claim for damages. A commercial solicitor can review the contract, analyse the dispute and tell you how strong your position, or the other side's, really is.