Breach of Contract

Non-performance, what are the possibilities?
When there is an agreement that is broken, it is referred to as a breach of contract. What exactly is non-performance and when is it? What can you do if your counterparty commits a breach of contract?

The general rules of non-performance will be discussed in this article. Please note: there are many different agreements specified in the law (each of which has its own rules that apply in addition to these general rules). So keep that in mind when assessing a specific situation.

When is there a breach of contract?
Non-performance is the case when one of the contracting parties fails to fulfil its part of the agreement at all, when one of the parties partially fails to fulfil its obligations or when the obligations are not properly fulfilled. In short: if what has been agreed is not done, no performance is achieved: non-performance.

There are many different situations that can lead to non-performance. Some examples:

• Piet has an agreement to deliver ten loaves of bread, but only delivers five;
• Jan has to pay the bricklayer of a wall but always does not;
• Hans wants to have a taxi at 20.00 and agrees. The driver does not turn into the street until 21.00;
• The cabinet that Truus has purchased collapses completely after a month due to a manufacturing defect;
• A website builder does not deliver a red website as agreed, but a blue website.

As can be seen, there are quite a few different things that can lead to non-performance. In principle, anything that deviates from the agreement is a breach of contract, since the agreement must in principle be fulfilled exactly.

How does someone know if a breach of contract has been committed?
In principle, this is simple: see what has been agreed during the conclusion of a legally valid agreement. If the performance of the other party deviates from this, then there is usually a breach of contract.

If the counterparty is of the opinion that the agreement implied something different from what the other person believes, then it is necessary to look at what the parties intended at the time of the conclusion. If they have written down 'the bushes must be cut down', but actually also meant the adjacent trees (and that was clear to both), then that means that the trees must also be cut down. If this is not done, it is a breach of contract. It should be noted that it is wise to clearly record on paper what the intention is. If one party in the example above believes that the trees should also be cut down, while the other believes that this is not the intention, this causes problems. This also causes problems when non-performance has to be proven before a judge, because then this party will have to prove that it is intended to also cut down the trees. That is difficult when it is not on paper.

What different solutions are there for non-performance?
If there has been a breach of contract, there are some solutions available. These are: compliance with compensation, non-compliance with replacement compensation, suspension of the obligations and dissolution of the agreement.

After this, they will be discussed in turn and the possible conditions for this will be briefly displayed.

Performance (with compensation)
First of all, compliance with the agreement can be claimed. This simply means that the agreement must still be fulfilled. In addition, compensation may also be requested for the damage caused by the breach of contract.

Replacement compensation for non-performance
It is also possible to opt for replacement compensation, instead of still fulfilling the agreement. This means that the other party no longer has to comply with his part of the agreement, but that he must pay compensation because he has committed default. Compensation for any other damage (such as consequential damage) can then also be claimed.

Before replacement compensation can be claimed, the other party must first be in default, if performance would still be possible immediately or over a period of time. This is done by means of a written notice of default, with a reasonable period of time to still comply in the event that compliance would still be possible immediately. Compensation for non-performance can only take place afterwards.

Suspension due to non-performance
Suspension is the withholding of your own obligations: you postpone the performance of your part of the agreement until the other has fulfilled his part. The possibility of suspension is only open if both parties have not yet complied. If one of the parties has already complied and the other commits a breach of contract, then there is nothing left to suspend.

In principle, suspension can therefore take place in the event of any claim that is due and payable that is not paid (i.e. breach of contract). However, there are some exceptions such as the possibility of suspension when the person who wants to suspend has ensured that the other could not comply (for example, the conclusion of an agreement, but do not want to give the address for delivery), or when the other party can no longer permanently comply (suspension is then pointless, the other means against default are of course still open!).

Dissolution of the agreement due to non-performance
Finally, there is the possibility of dissolution of the agreement after default. This means that the agreement ceases to exist. Instead of the agreement come two  reversal obligations, which impose on both parties the obligation to return any services already made. In addition, compensation can be claimed for the damage suffered as a cause of the breach of contract.

Before dissolution can be claimed in the event of non-performance, it must first be examined whether the other party could still immediately comply with the agreement. If that is the case, dissolution is only justified in the event of default. This default usually occurs by making a written notice of default in which a reasonable period of time is given to still comply. If the breach of contract remains present afterwards, it can still be dissolved.

Default
A debtor is, with a few exceptions, only in default after a notice of default. A notice of default has the function of giving the debtor a final period for performance and thus to determine in more detail until which time performance is still possible without a shortcoming. If the debtor still does not comply within that period, the debtor is in default from that moment on (HR 20 September 1996, no. 16 004, NJ 1996, 748).

Notice of default: summons letter
A notice of default is generally required for the occurrence of the default. This is a written statement that contains a reminder or summons or notice to perform within a reasonable period of time. If the debtor does not comply with the reminder, the default will take place at the time indicated in the summons letter. A notice of default is therefore a condition for the occurrence of the debtor's default. A notice of default is in fact nothing more than a notice to the debtor that performance is required. The default ends if the debtor still complies, if the creditor refuses a proper offer of performance and thereby becomes in default of creditors himself, or if performance still becomes permanently impossible.

Right to compensation
Every creditor is primarily entitled to performance. But if there is a breach of contract, he can also claim damages instead of compliance. If compensation is claimed in addition to compliance, one speaks of additional or additional compensation. If compensation is claimed instead of the agreed performance, this is referred to as replacement compensation. Additional compensation is due, for example, if  the agreed performance is late or defective. If the performance is not forthcoming, replacement compensation may be claimed.

What if the other party does nothing after non-performance and does not want to cooperate?
In the event that the other party does not comply, does not cooperate or does not fully cooperate, it is wise, if it concerns a substantial amount, to take legal measures. It is often sufficient to have a lawyer write a letter with the friendly but compelling request to comply with the agreement.

If that request does not yield anything, then going to court for breach of contract is a possibility. The court can force the other party to cooperate in the payment of damages or in the consequences of the dissolution of the agreement due to non-performance.

Breach of contract – Conclusion
In the event of breach of contract, a number of resources are available to the person who is the victim of this. These are: compliance with compensation, suspension of obligations, replacement compensation and dissolution of the agreement. Especially the last two are heavy measures, which in some cases are subject to additional conditions.

If the counterparty does not cooperate with the measures taken due to (alleged) non-performance, it is advisable to engage a lawyer. This also applies if you receive a summons because you would have committed a breach of contract. In general, the sooner you contact your lawyer, the greater the chance of a favorable outcome.

The role of AGA Lawyers
A lawyer of AGA Lawyers offers assistance in most cases within contract law. In the event of a conflict concerning contract law, an expert lawyer is at your side. Together with you, the lawyer determines the right approach and ensures the best possible solution and result. Advising, mediating, litigating, negotiating or drafting legal documents, AGA lawyers arrange it for you.

Contact AGA Lawyers
The contract lawyers of AGA lawyers can do a lot for you, such as guiding you throughout the entire process. Feel free to contact one of our expert contract law lawyers for a 1st free intake interview.

TELEPHONE: 040-8444523  (1st intake interview free of charge and without obligation) (Available Mon to Fri between 09.00h and 21.00h). We can also be reached by e-mail:
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