“Breach of contract” sounds like a single, simple legal concept. In practice, it covers an enormous range of situations, including, but not limited to, a supplier who stops delivering, a business partner who walks away from an agreement, a buyer who refuses to settle, a builder who abandons a job halfway through, a former employee who breaches a non-compete clause the moment they walk out the door.
Each of these is a breach of contract. Each one is also a completely different type of dispute, with different evidence, different urgency, different remedies, and often a different area of law sitting alongside it.
This guide sets out the main categories of breach of contract claims we act on for businesses, directors, and individuals across Sydney and NSW. If you are dealing with any of the situations below, call us on (02) 9233 7737 for an assessment of your position.
What you need to establish in any breach of contract claim
Regardless of the type of contract involved, the legal principles remain the same. To succeed in a breach of contract claim, you generally need to establish the following elements:
1. A Valid and Enforceable Contract
The first step is to establish that a legally binding contract existed between the parties. Depending on the circumstances, this may be a written agreement, an oral agreement or a contract implied by conduct.
2. The Relevant Contractual Terms
You must identify the specific contractual obligation or obligations that the other party was required to perform. Not every disagreement amounts to a breach of contract, the obligation relied upon must arise from the contract itself.
3. A Breach of the Contract
You must show that the other party failed to perform their contractual obligations, performed them inadequately, or refused to perform them altogether. The nature of the breach will depend on the terms of the contract and the surrounding circumstances.
4. Loss or Damage
A breach of contract alone is not always enough to justify compensation. You must demonstrate that you suffered financial loss or other legally recoverable damage as a result of the breach.
5. Causation (where relevant)
Finally, you must establish that the loss or damage was caused by the breach of contract. If the loss would have occurred regardless of the breach, it may not be recoverable.
How each of these elements is proven, and what remedy follows, depends heavily on the type of contract and the nature of the breach.
Common Types of Breach of Contract
Below are some of the most common types of breach of contract disputes we encounter and how they are typically resolved.
Breach of commercial supply and trading agreements
This is the most common category of commercial breach of contract dispute. A supplier fails to deliver goods on time, delivers defective goods, or stops supplying altogether. A customer refuses to pay for goods or services already delivered, in breach of agreed trading terms.
These disputes often turn on the precise wording of the supply agreement or purchase order, delivery timeframes, quality specifications, payment terms, and termination rights. Where no formal written agreement exists, the dispute may also involve an argument about what was actually agreed, whether by email, conduct, or an oral arrangement. See our article on whether oral contracts are enforceable for how courts treat agreements that were never put in writing.
For advice on supply and trading disputes, see our contract commercial disputes lawyers page.
Breach of business sale and acquisition agreements
Business sale disputes arise at two points: before completion, where a buyer or seller refuses to proceed or fails to satisfy conditions of the contract, and after completion, where one party breaches warranties given as part of the sale, for example, a seller who warranted the business had no undisclosed liabilities, when in fact it did.
These disputes are often high-value and time-sensitive, particularly where settlement is approaching and one party is threatening not to proceed. Post-completion breaches involving warranty claims typically require a careful review of the sale contract’s warranty and indemnity provisions, which are often heavily negotiated and contain specific notice periods and claim procedures that must be followed precisely.
See our business sale lawyers page for advice on both pre-completion and post-completion business sale disputes.
Breach of shareholder and partnership agreements
Where a company has a shareholders agreement, or a partnership has a formal partnership agreement, breaches typically involve a shareholder or partner acting outside agreed restrictions, competing with the business, failing to contribute agreed capital, refusing to follow agreed decision-making procedures, or attempting to transfer their interest in breach of pre-emption rights.
These disputes are different from ordinary commercial breaches because the parties usually have an ongoing relationship that the dispute has damaged, and because remedies often need to address not just compensation but the future governance of the business. In serious cases, breach of a shareholders agreement overlaps with statutory remedies for shareholder oppression under the Corporations Act.
See our shareholder disputes lawyers page or our partnership disputes lawyers page depending on the structure of your business.
Breach of building and construction contracts
Construction contracts generate some of the most procedurally complex breach of contract disputes, because the building industry has its own statutory framework layered on top of ordinary contract law. Common breaches include failure to complete work within the agreed time, defective workmanship, unauthorised variations, and non-payment of progress claims.
Because of the statutory regime under the Home Building Act and the Building and Construction Industry Security of Payment Act, building disputes are generally handled as a distinct category rather than as a standard breach of contract claim. See our building and construction page for the full range of construction-specific dispute services, including our dedicated building contract disputes lawyers page.
Breach of contract termination clauses
A significant category of disputes does not involve the underlying performance of the contract at all, it involves whether a party was entitled to terminate the contract in the first place. One party purports to terminate, claiming the other breached an essential term or repudiated the agreement. The other party disputes this, arguing the termination itself was wrongful and amounts to a breach.
These disputes are common in long-term service agreements, distribution arrangements, and franchise relationships, where the financial consequences of terminationare substantial. Getting the termination analysis wrong can turn the party who thought they were the victim of a breach into the party who has, in fact, committed one.
See our contract termination lawyers page for advice before issuing or responding to a termination notice.
Breach of restraint, confidentiality, and non-compete clauses
This category involves a former employee, contractor, or business partner breaching restrictive covenants,soliciting clients, using confidential information, or competing with the business in breach of a restraint clause.
These breaches are usually urgent. By the time the breach is discovered, the damage is often already occurring, clients are being contacted, confidential information is being used, a competing business is being established. Standard breach of contract remedies (damages assessed after a trial) are frequently inadequate because by the time a matter reaches trial, the client relationships or confidential advantage may already be lost permanently.
Breach involving non-payment and debt recovery
Many breach of contract claims are, at their core, simple non-payment disputes: an invoice that hasn’t been paid, a loan that hasn’t been repaid, fees owed under a services agreement. These are breaches of contract in the legal sense, but they are usually approached as debt recovery matters because the path to resolution is more direct: demand, statutory demand (for corporate debtors), and enforcement, rather than a contested trial over what was agreed.
See our debt recovery lawyers page. Where the debtor is a company and the amount is not genuinely disputed, our statutory demand lawyers page sets out a faster path to resolution than ordinary litigation.
Breach where the other party may not be able to pay
A particular and serious category of breach of contract dispute arises where, by the time you discover the breach, you have reason to believe the other party is moving assets, transferring funds, or otherwise positioning themselves to avoid paying even if you succeed in your claim.
This is not a separate type of breach, the underlying contractual claim may fall into any of the categories above, but it requires a different and more urgent response.
What you can claim once a breach is established
The remedy available depends on the type of breach and what you actually need:
Damages: monetary compensation putting you in the position you would have been in had the contract been performed. See our guide to Australian contract damages for how damages are calculated.
Specific performance: a court order compelling the other party to actually carry out their obligations, used where money cannot adequately compensate for the loss (for example, a unique property or a unique asset).
Injunctions: orders stopping ongoing or threatened conduct, most relevant in restraint and confidentiality breaches.
Termination and restitution: bringing the contract to an end and recovering amounts already paid where appropriate.
For a fuller explanation of these remedies in general terms, see our breach of contract guide.
When does a breach of contract dispute go to court?
Most breach of contract disputes do not end up in a courtroom. Many resolve through a letter of demand, negotiation, or mediation. Litigation becomes necessary when the other party disputes liability, the amount in dispute justifies the cost of proceedings, or urgent court intervention is needed to prevent further harm.
If your matter does proceed to litigation, our civil and commercial litigation lawyers act in the Local, District, and Supreme Courts of NSW across all categories of breach of contract claim.
Contact our commercial litigation lawyers
Whatever form your breach of contract dispute takes, the right approach depends on the specific category of claim and how urgent your situation is.
Call (02) 9233 7737 or contact us online for an assessment. We will tell you honestly what type of claim you have, what it is likely to cost to resolve, and the most direct path to a result.
For the full range of litigation services we provide across all categories of commercial and civil dispute, see our litigation lawyers Sydney page.
This article was prepared by the Citilawyers Legal Team, NSW-admitted solicitors based in Sydney CBD. It is general information only and does not constitute legal advice.
