Common issues in business-to-business breach of contract claims

A breach of contract happens when one party fails to fulfil their obligations as outlined in a legally binding agreement. When a commercial relationship breaks down, a breach of contract claim is often at the centre of the dispute.

While every case is different, there are recurring issues that frequently determine whether a breach of contract claim succeeds, how much it costs, and how quickly it can be resolved.

Drawing on our experience of advising businesses on contractual disputes, our commercial litigation lawyers outline the most common challenges we see in breach of contract claims, and what businesses should be thinking about at an early stage.

1. Is there a binding contract at all?

Surprisingly, one of the most common concerns is whether a legally binding contract exists.

Businesses often assume that, because work was done or goods supplied, a contract must exist. In reality, issues regularly arise where:

• Key terms were never agreed upon
• Negotiations were ‘subject to contract’
• There are competing documents, e.g. quotes, purchase orders, and terms and conditions
• The agreement was verbal or informal

In business-to-business disputes, courts will look closely at offer, acceptance, consideration and intention to create legal relations. Unclear or inconsistent paperwork can make this far harder and more expensive to prove than clients expect.

2. Whose terms apply? The ‘battle of the forms’

A classic problem in commercial disputes is the ‘battle of the forms’. This happens when two parties are negotiating the terms of a contract, and each party wants the contract to be governed by its own terms.

Battle of the forms normally happens where:

1. One party issues a quotation with its terms
2. The other responds with a purchase order on different terms
3. Performance then begins without resolving the inconsistency

As a result, both parties are unclear about which terms govern the contract, if any.

The answer often lies within fine details, such as the sequence of documents, how acceptance occurred, and whether performance amounted to acceptance of the ‘last shot’. The ‘last shot’ means that the terms in the final document that was exchanged will be incorporated.

Battle of the forms disputes can have a significant impact on liability, limitation of liability clauses, payment terms and dispute resolution procedures.

3. What exactly was the alleged breach?

Another common issue in breach of contract claims is identifying the exact contractual obligation said to have been breached. Our commercial litigation lawyers often see:

• Vague or poorly drafted obligations
• Confusion between contractual terms and non‑binding statements
• Arguments over whether obligations were conditions, warranties or intermediate terms

For example, missing a delivery date may or may not be grounds for termination, depending on how the contract is written and how the parties behaved.

The court will interpret contracts objectively, and not according to what one party thought the agreement meant. This can come as an unpleasant surprise to businesses relying on assumptions rather than clear drafting.

4. Performance, variations and informal dealings

Business relationships rarely operate exactly as originally agreed. Over time, it is common for parties to agree on changes informally, disregard contractual requirements and/or accept late or partial performance.

Unfortunately, this can result in complex arguments about whether a contract term was varied, rights under the contract waivered or arguments over ‘estoppel‘, where one party seems to be trying to go back on an accepted arrangement.

A dispute often arises where one party later wants to enforce the original contract terms after a period of relaxed or inconsistent performance. The other party may argue that the contract was varied, or that it would be unfair to enforce strict rights.

These situations are highly fact-sensitive and depend heavily on evidence of communications and behaviour over time.

5. Can the Claimant prove their damages?

Even where a breach of contract is established, many claims fail on loss and causation.

Key issues when proving damages include:

• Whether the loss was actually caused by the breach
• Whether the loss is too remote, i.e. legally considered too far removed from the initial breach of contract
• Whether the Claimant was able to mitigate their loss

Business owners often assume that proving a breach of contract automatically entitles them to substantial damages (compensation). In reality, the court will scrutinise the financial evidence closely. Inadequate records, speculative losses or failure to mitigate can significantly reduce recoverable sums.

6. Limitation of liability and exclusion clauses

Limitation and exclusion clauses can be crucial in business disputes. Common points of dispute include:

• Whether the clause was incorporated into the contract
• Whether the clause covers the breach in question
• Whether the clause is reasonable and enforceable

In B2B contracts, these clauses can cap liability at relatively modest amounts or exclude certain heads of loss altogether. Businesses are often unaware of the commercial impact of these provisions until a dispute happens.

7. Was the termination lawful?

Termination of a contract is a high‑risk area and a frequent source of counterclaims. Disputes commonly arise where:

• A party terminates the contract for an alleged breach that does not justify termination
• Contractual termination procedures are not followed
• The terminating party acts prematurely

An unlawful termination can itself amount to a repudiatory breach, meaning the recipient of the unlawful termination can choose to end the contract or support it. This exposes the terminating party to significant damages, so it is important to seek legal advice before taking this step.

8. The importance of evidence

From a practical perspective, many breach of contract claims succeed or fail on the quality of evidence, such as:

• Missing or incomplete contracts
• Insufficient email trails
• A lack of records made at the time
• Inconsistent internal documentation

The weight that evidence holds in breach of contract claims highlights the importance of good contract management and record‑keeping.

9. Alternative Dispute Resolution (ADR)

Courts expect parties to engage in ADR, such as mediation, before starting court proceedings, and even during a claim’s lifecycle.

Failure to do so can have serious cost consequences, even for the successful party. Many commercial disputes can be resolved far more quickly and cost-effectively through negotiated settlement than litigation.

The importance of legal advice in breach of contract claims

Breach of contract claims are rarely straightforward. What may appear to be a clear‑cut dispute often involves complex questions of contract formation, interpretation, performance and loss.

Early legal advice in breach of contract claims can help businesses assess the true strength of their position, avoid costly errors and protect their commercial reputation.

Contact our Commercial Litigation team

If you are facing a contractual dispute with another business, we can help. Call our commercial disputes solicitors on 0117 325 2929 or fill out our online enquiry form.