In India, all the contracts and agreements are governed by the Indian Contract Act, 1872. So, when a contract or a clause of it is breached, a party can send a legal notice for it under the Civil Procedure Code. The aggrieved party can file a case if the legal notice is ignored or not adhered to appropriately.
When does a breach of contract happen?
A breach of contract causes a loss to the aggrieved party and occurs when:
- One party does not perform their part in an agreement
- Interferes with the performance of other parties
- A party to a contract does not comply with the clauses of the contract
- Expresses a desire not to continue with the contract
- Does not maintain the desired quality of work
What is a Legal Notice for Breach of Contract?
Legal notice for breach of contract is a notification by one party to another party to a contract, informing them that they have breached the contract by not performing their part of the contract.
In such scenarios, it becomes necessary for one party to serve a legal notice to the other party, informing them in detail how they have failed to meet the terms of the contract. This is the most primary step in resolving contractual disputes.
A legal notice for breach of contract should be strict, keeping in mind the terms of the contract, that discusses the requirements for the notice of breach of contract.
This notice also discusses the actions the breaching party to a contract needs to take in either rectifying the problem or terminating the contract. This notice also deals with the compensation to be paid for the incurred damages.
Legal notices are clear and specific in their language. It clearly directs the action to follow in a specific time frame, within which problems need to be solved.
Essential Points to Include in a Legal Notice for Breach of Contract
- Name, description, and place of residence/office of the breaching party.
The legal notice format for breach of contract must contain the correct and proper name, description, and address of the breaching party.
- The date of receipt of the notice when received by the breaching party.
One of the most important purposes of this notice is to keep an official record of the date. It’s the date on which the breaching party was officially informed of the breach of contract committed by them. This date of communication becomes an important point if the dispute ultimately moves to court.
- Mention the clause of the notice described in the contract.
Almost all the contracts signed between parties have a notice clause that describes how the legal notice format for breach of contract is to be conveyed to the breaching party.
It consists of the contact information of all the parties and the method of communication of the legal notice for breach of contract – to be sent either by registered post, speed post, email, or fax.
If the procedures described in the notice clause of the contract is not followed properly then it will not be treated as a valid legal notice for breach of contract and will become beneficial to the breaching party. One should clearly outline the breach in detail.
The legal notice format for breach of contract must be conclusive about the cause of action and the relief sought.
The breach committed by the breaching party can be of the following nature:
- When the breaching party failed to perform their duties in accordance with the contract. Example: In a contract of sale of immovable property, if the vendor hasn’t handed over the property as was promised in the contract.
- When the breaching party clearly refuses to perform his/her obligations under the contract in the future.
- When the breaching party makes it impossible for the other party to perform his/her obligations according to the contract.
In a legal notice, it’s important to identify the clauses of the contract that have been breached. If there is a breach of more than one clause, then all of them need to be included in the notice. Irrespective of the type of breach which has occurred or the reason for the breach.
- Give importance to material breach of the contract
Legal notice for breach of contract can be sent for any type of breach but to get proper relief in this case, importance should be given to material breach.
Material breach means the kind of breach which destroys the whole purpose of the contract. Thus, inflicting huge material loss to the non-breaching party.
After serving the legal notice for breach of contract the party can sue the breaching party before the appropriate court of law under specific non-performance of a contract and also claim for damages.
- Description of the action to be taken by the breaching party to cure the breach of contract.
Generally, a legal notice for breach of contract is a remedy called for before taking the matter to court and as such to make this notice effective, detailed course of actions need to be directed to the breaching party to rectify their breach in the contract.
- Few other points that need to be followed while drafting a legal notice for breach of contract include:
1) All previous communications regarding the breach of contract.
2) Offering the breaching party with a reasonable time of 15 to 30 days to settle the matter:
- Either through negotiation
- Or, By performing the desired action of the non-breaching party
3) A lawyer should duly sign the legal notice.
4) The lawyer will retain a copy of the said notice.