Breach of Contract in Commercial Agency Law

Contract disputes are an
unfortunate fact of life in
many areas of business, and
commercial agency law is
no exception.
While negotiation can help
to resolve most disputes
and disagreements, when a
breach of contract is
sufficiently serious, the
innocent party may be
e n t i t l e d t o t r e a t t h e
contract as being at an end.

The right to terminate the agency
contract does not arise through all
breaches of contract. As a rule, the
breach must strike to the heart of the

For example, merely being a few days
late in paying a commission would not
generally be seen as being a serious
enough breach to terminate a contract.
However, if there are a number of small
breaches over time, the final breach in
combination with past breaches may be
seen as “the straw that broke the camel’s
back”, and can be regarded as sufficient
grounds to bring the contract to an end.
As invalid termination of a contract can
constitute a fundamental breach of
contract in itself, terminating a contract
is not a step that should be taken lightly.
After the contract has been breached,
the innocent party is allowed a
“reasonable” period of time in which to
decide whether or not to terminate the
contract. If the innocent party waits for
too long after the breach, or if they
continue to honour the terms of the
contract after the breach, then they can
lose the right to terminate.

The best course of action after a
suspected serious breach of contract
should be to suspend all work under the
contract and take professional advice on
the matter as soon as possible to
determine the best course of action.

Commercial agency law:

Ashby Cohen Solicitors Ltd
18 Hanover Street London W1S 1YN
Tel: 0207 408 1338
Fax: 0207 491 0414

Disclaimer: This column does not contain legal advice and is for general guidance only. Agentbase, Ashby Cohen and the writer accept no liability in connection with the general guidance given in this column.

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