What to Do When a Contract is Breached

What to Do When a Contract is Breached

Commercial Law, Litigation

A contract is a legally binding agreement between two or more parties that creates rights and obligations for each party. When one party fails to perform their contractual duties, a breach of contract may result. A breach of contract can have serious consequences for both the breaching party and the innocent party, such as loss of money, time, reputation, or opportunities. Therefore, it is important to know what to do when a contract is breached, and what remedies are available to the injured party.

Legal Consequences and Remedies for a Breach of Contract

The legal consequences and remedies for a breach of contract depend on the nature and extent of the breach, and the effect it has on the innocent party. There are three main remedies that a court can award to the injured party:

  • Damages: This is the most common remedy for a breach of contract. Damages are a monetary compensation that aim to put the innocent party in the same position as if the contract had been performed. There are different types of damages and some damages may be expressly excluded from a contract. Damages are a common law remedy for a breach of contract.
  • Injunctions: This is a court order that requires the breaching party to do or refrain from doing something. Injunctions are usually granted when damages are not adequate to remedy the breach and where the balance of convenience is considered. For example, an injunction can be used to stop the breaching party from disclosing confidential information, or from competing with the innocent party. An injunction is an interim step in the resolution of most proceedings where it is sought, meaning that the party seeking an injunction still needs to show that it has a substantive cause of action. Injunctions are an equitable remedy.
  • Specific performance: This is a court order that requires the breaching party to perform their contractual obligations exactly as agreed. Specific performance is usually granted when the subject matter of the contract is unique or irreplaceable, such as land, art, or antiques. However, specific performance is not available if the performance would be impossible, illegal, or unfair. Specific performance is another equitable remedy that may be open to an innocent party.

Whether or not a party has a cause of action and the remedies that they should seek needs to be determined following a review of the circumstances by a lawyer.

How to Prevent or Resolve Contract Disputes

The best way to prevent or resolve contract disputes is to have a clear, comprehensive, and well-drafted contract that covers all the essential terms and conditions of the agreement, and that anticipates and addresses any potential issues or risks that may arise. A good contract should also include a dispute resolution clause that specifies how the parties will handle any disagreements or conflicts that may occur, and what methods or mechanisms they will use to settle them. Some of the common methods or mechanisms for resolving contract disputes are:

  • Mediation: This is a voluntary and confidential process where the parties try to reach a mutually acceptable solution with the help of a neutral third party, called a mediator. The mediator does not decide the outcome, but rather facilitates the communication and negotiation between the parties. Mediation is usually faster, cheaper, and more flexible than litigation, and it can preserve the relationship between the parties.
  • Arbitration: This is a binding and enforceable process where the parties submit their dispute to a neutral third party, called an arbitrator, who makes a decision based on the evidence and arguments presented by the parties. The arbitrator’s decision is final and cannot be appealed, unless there is an error of law or procedure. Arbitration is usually more efficient, private, and less formal than litigation, but it can also be more expensive and less predictable.
  • Litigation: This is the process where the parties take their dispute to court and have a judge or a jury decide the outcome. Litigation is usually the last resort, as it can be costly, time-consuming, stressful, and adversarial. Litigation can also result in a public record of the dispute, which can damage the reputation or goodwill of the parties.

How Law Quarter Can Help You

At Law Quarter, we are experts in contract law and dispute resolution. We can help you draft, review, negotiate, and enforce your contracts, and protect your interests and rights in case of a breach. We can also advise you on the best course of action to take when a contract is breached, and assist you in pursuing or defending a claim for damages, injunctions, or specific performance. We can also represent you in mediation, arbitration, or litigation, and help you achieve a favourable and satisfactory outcome. If you need legal assistance with any contract-related matter, contact us today for a free consultation.

How do I enforce a judgment debt in NSW?

How do I enforce a judgment debt in NSW?

Litigation

So a company or person owed you money and you’ve now managed to secure a judgment in a court of NSW ordering them to repay the debt (a judgment debt). What now?

When a person (the ‘judgment creditor’) obtains a court judgment ordering a person (the ‘judgment debtor’) to return goods or pay money, the judgment debtor will not always comply with the judgment. They may not have the money or resources to pay the debt or they may simply be avoiding payment.

In this situation, the judgment creditor has 12 years from the date of the judgment to enforce the judgment. This is known as an ‘enforcement’ action. Enforcing a judgment debt in New South Wales (NSW) involves a process of collecting the money that is owed to you by the judgment debtor.

Here are the general steps to enforce a judgment debt in NSW:

  1. Obtain a copy of the judgment: This can be obtained from the court that issued the judgment or from the Sheriffs’ Office. The ‘Office of the Sheriff of NSW’ is a government authority responsible for court security, administering the NSW jury system and specific law enforcement such as serving warrants and enforcing various court orders (such as a writ).
  2. Identify the judgment debtor’s assets: This can include property, bank accounts, vehicles, or wages. You will need to find out where the judgment debtor’s assets are located and how they can be accessed. You can do this through a court via an examination notice (a form the debtor must fill out responding to questions about their income, assets and liabilities) if the judgment debtor’s assets are not easy to ascertain. 
  3. Issue a Writ for Levy of Property: Once issued, this type of writ authorises the Sheriff to seize and sell at auction personal property belonging to the debtor to pay the debt. You will need to provide the Sheriffs’ Office with a copy of the writ of execution, the judgment, and a fee for their services. The writ is valid for 12 months. If there is not enough personal property to satisfy the judgment debt that is owed to you and the debt is over $20,000, you can apply for an order seeking the sale of real property (land).
  4. Issue a Writ for the Delivery of Goods: This can be used if the court ordered the judgment debtor to return certain goods to you and they haven’t been returned. It authorises the Sheriff to seize the goods and return them to you (the judgment creditor) or recover their value by seizing other property and selling it. This type of writ is also valid for 12 months.
  5. Garnishee Order: If the judgment debtor has income, such as wages or salary, you can obtain a garnishee order. A garnishee order directs the judgment debtor’s employer or other organisation that holds money for the judgment debtor to pay some or all of the money owing to you, directly to you from their bank account, salary or wages.
  6. Charging Order: In the case of a judgment debt of the District or Supreme Court of NSW, you may wish to obtain a charging order. A charging order creates security over a specific asset(s) owned by the judgment debtor to the value of the judgment debt and restrains the judgment debtor from dealing with the asset.
  7. Debtor Examination: If the judgment debtor fails to comply with an examination notice you may apply to the Court for an examination order. An examination order summons the judgment debtor to Court to provide details of their financial affairs. To obtain an examination order you must apply to the appropriate Court and then personally serve it on the judgment debtor. The judgment debtor will then be required to attend an examination hearing where they will complete a statement of financial position attaching all relevant documentation.
  8. Bankruptcy Proceedings: Where the judgment debt is greater than the statutory minimum and the judgment debtor is an individual, you may wish to serve a bankruptcy notice. The current statutory minimum for a bankruptcy notice is $10,000.00. A bankruptcy notice must be personally served on the judgment debtor. Once served with a bankruptcy notice the judgment debtor has 21 days to make payment, or otherwise enter into a suitable repayment arrangement. If the judgment debtor fails to comply with the bankruptcy notice then they have committed an “act of bankruptcy”, and you are able to present a creditor’s petition seeking a sequestration order which effectively makes them bankrupt. A trustee in bankruptcy is then appointed to investigate the debtor’s financial affairs for the benefit of creditors.

Checklist

Requirement Status
Obtain a copy of the judgment
Identify the judgment debtors assets
Issue a Writ for Levy of Property
Issue a Writ for the Delivery of Goods
Garnishee Order
Charging Order
Debtor Examination
Bankruptcy Proceedings

The process of enforcing a judgment debt can be complex and time-consuming, and it may be necessary to seek the advice of a lawyer or a debt collection agency. 

Additionally, there may be limitations on the amount and types of assets that can be seized, and there are certain exemptions that apply, such as a principal place of residence and other assets with exemptions by law.

For help recovering a judgment debt, reach out to us at info@lawquarter.com.au or call us on (02) 8318 5962 for assistance and advice from one of our experienced litigation and commercial lawyers.

Navigating the Challenges of Litigation: Strategies for Managing the Process

Navigating the Challenges of Litigation: Strategies for Managing the Process

Litigation

Litigation can be a complex and challenging process for all parties involved. Whether you are a plaintiff or a defendant, the legal system can be daunting and difficult to navigate. The uncertainty and financial burden of litigation can take a toll on both individuals and businesses. In this blog post, we will discuss some of the challenges of dealing with litigation and strategies to manage the process.

Uncertain outcome

One of the most significant challenges of litigation is the uncertainty of the outcome. There is no guarantee of a favorable outcome, and even if you have a strong case, there is always the possibility of losing. This uncertainty can be emotionally and financially draining, and it can be difficult to know how to plan for the future.

For most of our lives, we have the ability to control events around us. From going to work, to socialising, we are usually in control. In litigation, however, the outcome and process is set by the rules of court procedure, the other side and other factors.

Cost

Another challenge of litigation is the cost. Litigation is expensive, and the cost can quickly spiral out of control. Even if you have a strong case, the cost of legal fees, expert witnesses, and other expenses can be prohibitive. This can be especially difficult for individuals and small businesses who may not have the financial resources to cover the cost.

When engaging a lawyer, ensure that you have a frank up front discussion about costs. They may need to give you a revised cost estimate over time and need to ensure that you know the status of your case and likely future costs.

Time

The length of the process is also a significant challenge in dealing with litigation. Litigation can take a long time, and the process can be drawn out for months or even years. This can be frustrating, and it can make it difficult to move on with your life or your business.

Personal stress

In addition to the financial and emotional challenges, litigation can also have a significant impact on your personal and professional relationships. The legal process can be stressful, and it can put a strain on relationships with friends, family, and business partners.

Strategies

Despite these challenges, there are strategies that can be used to manage the process and mitigate the negative impact of litigation. One strategy is to work with a qualified lawyer who can guide you through the process and help you understand your rights and options. A good lawyer will be able to assess the strengths and weaknesses of your case and help you develop a strategy for moving forward.

Another strategy is to try to settle the case out of court. Mediation, arbitration, or settlement negotiations can be effective in resolving disputes without the need for a trial. This can save time, money and the emotional toll of the litigation. A good lawyer will be able to advise you on the best approach to take and help you reach a resolution that is in your best interests.

It is also essential to stay organized and keep detailed records of all correspondence and expenses related to the case. This will help you keep track of the progress of the case and will be helpful if you need to provide evidence in court.

A good way to manage the emotional and stress aspect of litigation, is to set expectations and create a plan to keep your work and personal life separate. This can help you avoid becoming too consumed by the case and will make it easier to focus on other important aspects of your life.

In conclusion, litigation can be a challenging and difficult process for all parties involved. The uncertainty, cost, and length of the process can take a toll on individuals and businesses. However, by working with a qualified attorney and adopting strategies such as settling out of court, staying organized and setting expectations and boundaries, it is possible to mitigate the negative impact of litigation and move forward with your life or business.

If you would like to discuss your matter, please contact us.