Recent Breach of Contract Case Awards Company Over £23million in damages
An arbitrator ordered US actor, Kevin Spacey and his companies to pay nearly $31 million (£23.2m) to MRC, the production company behind “House of Cards,” following the sexual harassment allegations against the actor, stating that Spacey breached his contract by violating the company’s sexual harassment policy.
The secret ruling was made in the early part of 2020, but became public in November this year, after lawyers for the studio, MRC, filed a court petition to the Los Angeles Superior Court to confirm the award. The petition made by MRC confirms that a ruling was made in the studio’s favour. Mr Spacey and his production companies, M Profitt Productions and Trigger Street Productions, were ordered to pay damages, lawyers’ fees and court costs.
He subsequently appealed against the decision, but it was denied.
MRC terminated their relationship with Spacey and scrapped a season of the show in 2017 after multiple individuals came forward alleging a pattern of sexually predatory conduct.
The importance of contracts between individuals and companies is essential. They are the foundation of regulating even the most basic forms of interaction between parties and cover many different aspects of a business relationship.
Whilst this case is somewhat unusual due to its nature and damages award, unfortunately, breaches of contract between businesses do happen quite frequently. Being involved in any form of contract dispute, as this case highlights (regardless of the damages amount), can impact on commercial relationships, hinder working practices, and cost a business time and money.
In this article we look at breach of contract frequently asked questions and what can be done if a breach of contract occurs.
What is a breach of contract?
A contract, if fairly entered by both parties, is legally binding and would typically hold weight in court. However, it is imperative to prove that a breach occurred. A breach of contract happens when one party breaks one of the ‘terms or conditions’ within the agreement or fails to deliver their obligations under their contract. Contract disputes can occur for various reasons and can range from a late payment to a more serious offence, as referred to in the MRC vs Kevin Spacey Breach of Contract case.
A breach of contract does not necessarily only apply to written contracts or agreements. A breach can be applied to a verbal, written, or even an implied term of the contract. Some of the instances where a breach can occur include but are not limited to:
- Being late with services without a reasonable excuse
- An individual not paying for a service or paying within the timescale specified
- A party’s refusal of performing their duties in a contract
- Failure to deliver goods or services
- The work carried out results as defective
- Breach of employment contract
What are the different Breach of Contract types?
A breach of contract usually falls into four categories, minor, material, fundamental (repudiatory), and anticipatory.
- A minor breach of contract– A minor breach of contract is also referred to as a partial breach. It is a breach that is less severe than a material breach. A minor breach allows the party that has been negatively affected the right to sue for damages, but it does not necessarily harm the outcome of the overall contract.
- A material breach of contract -A material breach of contract has more severe consequences on the outcome of the contract. In the instance of a material breach of contract, the party would not have entered the terms of the contract if they had not agreed or guaranteed this term. An example of this would be buying a computer online and only receiving the monitor. This would be a material breach, and you would be required to take legal action.
- A fundamental breach of contract – A fundamental breach is also called a repudiatory breach of contract. The severity of this breach means the contract is terminated rather than the affected party seeking damages. An example of this is the failure to give the required notice period to terminate employment.
- An anticipatory breach of contract– An anticipatory breach of contract is one of the least common of the four types of contract breaches. It is when a party acknowledges that they will not be able to fulfil their side of the contract in the agreed time or way. The affected party is usually notified of the incapability hence the name anticipatory. It is, however, still applicable for the affected party to take legal action.
Do I have a breach of contract case?
If you are making a breach of contract claim, and are planning on taking a case to court, you will need to prove:
- Proof that there was a contract in place – Ideally, you need to provide the legally binding contract that was in place to prove that it had been breached.
- Proof that the other party did not perform their side of the contract substantially – This is needed in order to make the comparison between the actual terms of the contract and how it had been breached.
- Proof that you suffered a loss as a result of the other party’s actions -The affected party must prove there was a loss or damage as a result of the breach of the contract and requires compensation.
You will also be expected to take the necessary steps to mitigate your losses (a term to describe reducing damages in legal claims and avoid avoidable loss) to reduce the impact of the breach of contract. You should show that your losses cannot be recovered and could not have been reasonably avoided. The other party, being accused of the breach, could argue that the affected party failed to mitigate their loss to reduce the damage done.
Expert Legal Advice
If you are facing a dispute due to a breach of contract, you should ensure that you receive the best legal advice to guide you throughout the process. Contract disputes involve complex areas of law and when a breach of contract occurs, it is essential to seek early advice to ensure the right approach is taken and to avoid costly mistakes.
As well as litigation, our commercial law team has considerable experience of many other dispute resolution mechanisms, including arbitration, adjudication, and alternative dispute resolution. Courts take a dim view of parties who do not try to resolve their disputes via ADR (Alternative Dispute Resolution) before taking a case to court. Our commercial dispute resolution team will ensure we work with you to find a solution that is in your best interest aiming for a fast, cost-effective solution that avoids litigation where possible. However, if ADR is not the right course of action for you, or if mediation fails, we have the skills and experience to achieve the best outcome for our clients by taking cases to court.