Businesses enter into contracts with a variety of organisations and individuals for the provision of goods and services - it is a reality of operating in the commercial world.
Unfortunately, however instances do arise when terms of these contracts are not observed and the expectations of are not met. Where the terms of a contract have been broken, or have been performed but to a lesser degree than would have been expected, it is important to understand the options available.
At Sherwin O’Riordan, our expert commercial solicitors routinely advise on the handling of business contract disputes. We understand that these disputes can be an unwelcome expense, both in time and money, for our clients, and pride ourselves in offering a service that helps to resolve any business contract matters as efficiently as possible.
You can also now read our new publication - Resolving Disputes: A Brief Guide for Business Owners.
Contract Law in Ireland
As a matter of law, where you or your organisation enters into a contract with a provider of goods or services, you are entitled to have certain expectations. These are set out in the Sale of Goods and Supply of Services Act, 1980 and cover:
- That the supplier has the requisite skills to provide the service you have contracted for;
- That your service provider will carry out delivery of such services with the necessary skill and care expected of them;
- That your service provider will, in provision of their services to you, use materials and/or goods that are fit for purpose; and,
- Where the contract in question concerns the supply of goods, they will be of merchantable quality.
In most cases, it is advisable that whatever you have contracted for in terms of service delivery, payment, deadlines etc, should be noted down in a written document. This allows for there to be no ambiguity in what you expect from a service provider. It may, however, be the case that a particular agreement was not noted in writing. This is not uncommon in certain sectors, and will not prevent a contract for the provision of services from existing.
What options are available to address an actionable wrong?
It is important to be aware that a failure by a service provider to observe the terms of a contract does not always mean that it is wise to immediately resort to formal legal action. The nature of the contract in question, and the relationship between your business and service provider should be considered.
Actions for Breach of Contract
Contracts are by their nature made up of a variety of terms. These terms are categorised as falling into one of two groups:
- ‘Conditions’ or fundamental terms
- ‘Warranties’ or non-fundamental terms
Ultimately, whether a term of a contract falls into one category or another, will depend on the nature of the contract itself.
Some contracts may be particularly valuable, or may have been the result of a significant investment in time and/or money. In such cases, it may be wise to bring any of your dissatisfaction of delivery of the contract to the attention of the provider. It is not uncommon that, where a service provider is made aware of the fact that they have breached a contract, they may offer to remedy the situation in the hopes of preserving the relationship.
Alternatively, it may be the case that a service provider is not willing to consider your wishes, and disagrees that there has been any breach of their contract with you. If this is the case, there may be a need to take formal legal action against them. Where there is a breach of a non-fundamental term of the contract, the 1980 Act allows for you to either:
- Demand a reduction in the price originally agreed, or
- Pursue an action for damages in the courts.
It is important to keep in mind that an action for damages does not entitle a party to pursue any sum of money. The measure of damages is governed by the 1980 Act, and will be the estimated loss that you suffered as a result of the contract being breached.
The situation is different where your business is dealing as a consumer of goods/services being provided under a contract, where a warranty has been breached. If this is the case, you are empowered, in the first instance, to request that the breach be remedied. If your request is not addressed to your satisfaction, or within a reasonable time, you are then entitled to:
- Reject the goods/services under the contract and bring the relationship to an end; or
- Secure the goods/services you need from another provider and pursue the party that breached their contract with you in an action for the cost you incurred.
Actions for Misrepresentation
A great deal can happen in the negotiation and finalising of business contracts: many different things can be discussed and agreed to. As a result, there is a risk that one party may make certain statements or assertions in respect of a contract, i.e. to perform certain duties, that they know to be false in order to induce another party to negotiations to agree to the contract.
This kind of situation is known as ‘misrepresentation’ and can cause businesses significant difficulties, where they had agreed to enter into a contract on the belief that certain things would happen by doing so. If you have entered into a contract in the belief that certain duties would be performed, which are subsequently denied to you and you suffer loss as a result, then you may be able to raise an action for damages. As is the case in an action for a breach of contract, the level of damages will be determined by the loss that you have suffered.
Contact our Business Contract Dispute Lawyers in Dublin
At Sherwin O’Riordan, our lawyers have many years of experience advising on a variety of business contract disputes. We understand the need of clients to be supported by commercially minded legal advisors, who understand how to approach matters with a view to securing the best result possible. If you are concerned about a business contract, get in touch on touch +353 1 663 2000 to speak with one of our experienced solicitors.