The first port of call in disputes of this nature is to examine the terms of the contractual agreement. The terms of an agreement are more often than not contained in “terms of business” or “terms and conditions”, but may also be found in specially drafted documents, as well as in correspondence, order forms and orally communicated words, promises and representations.
The first step in any contractual dispute is to analyse what terms have been agreed, and what obligations are actually contractually binding. Your options will then depend on whether the term that has been breached goes to the heart of the contract. This is called a “fundamental breach”. If there is a fundamental breach, this will usually allow the innocent party to end the agreement and claim compensatory damages. If the term that has been breached does not go to the heart of the contract and is therefore not a fundamental breach, then this will usually mean that the contract must continue, but the innocent party can also claim damages.
If you believe that your supplier or contractor may have committed a fundamental breach, you should take urgent and legal advice. The danger is that if you delay in terminating the agreement, this may be considered as waiving your right to terminate which means that the contract must continue.