What to do when a client breaches a contract

First, work out what kind of breach you are dealing with

A breach of contract does not have to be dramatic. It might be a client who pays thirty days late, a business that cancels a project halfway through, or someone who withholds payment because they claim the work is not up to scratch. Before you react, identify what has actually gone wrong, because the label shapes everything that follows.

Some breaches are minor — a small delay, a slightly different deliverable. You can usually claim compensation for any loss caused, but you must keep performing your side of the bargain. Others are material, meaning they go to the heart of the agreement and let you treat the contract as at an end. If a client refuses to pay anything at all, or blocks you from doing the work entirely, that is likely to be material. Check what your own contract says about termination, notice periods and what counts as a breach — many well-drafted agreements spell this out.

Document everything, starting today

Memory is not evidence. The single most useful thing you can do in the first 48 hours is build a clear, dated record. Courts, mediators and insurers all respond to a calm paper trail, and it makes negotiation far easier because you can point to facts rather than feelings.

• Save the signed contract, statement of work, and any variations agreed by email.
• Keep a timeline: dates of deliverables, invoices sent, payments due, and what happened when.
• Preserve emails and messages in their original form. Do not edit or delete anything.
• Note the losses you have suffered — lost time, extra costs, subcontractor fees, interest.
• Write a short factual summary for your own file while events are fresh.

If the breach is ongoing, put your concerns in writing early. A polite email confirming what was agreed and what has not happened often resolves things quietly, and it creates a record if it does not.

Know your remedies before you start talking

Remedies are the outcomes the law can give you. Knowing them stops you from asking for the wrong thing or settling too cheaply.

• Damages — money to put you in the position you would have been in had the contract been performed. This usually covers lost fees and costs, but not speculative losses.
• Debt claim — where the work was done and the invoice is unpaid, you are simply owed a sum. That is often easier to prove than general damages.
• Specific performance — a court order forcing the other side to do what they promised. Rare, and usually only where money cannot fix the problem.
• Termination and damages — ending the contract for a material breach and claiming for the losses that follow.
• Statutory interest — under late payment legislation you can often charge interest on overdue commercial invoices, plus a fixed sum for recovery costs. Check your contract does not opt out, and remember the rules differ in Scotland.

Try a commercial conversation first

Most disputes never see a courtroom, and that is usually good news. Litigation is slow, stressful and costly, and even a win can leave a small business out of pocket. Before you escalate, try one clear, firm conversation.

Set out the breach, the remedy you want, and a reasonable deadline — for example, payment within fourteen days. Keep it professional. Offer options: a payment plan, a partial refund, a reduced scope going forward. A client with cash-flow problems may not be able to pay in full today but can pay over two months. A written settlement agreement, even a short one, is worth having so nobody reopens the issue later.

Consider whether you want to continue the relationship at all. Sometimes the commercially sensible answer is to finish the current work, get paid, and decline future projects.

Mediation and formal steps

If direct negotiation stalls, mediation is often the next best move. It is quicker and cheaper than court, confidential, and gives both sides room to be honest. A mediator does not decide who is right — they help you reach a deal. Many contracts include a clause requiring mediation or another form of alternative dispute resolution before proceedings, so check yours.

Alongside this, consider sending a formal letter before action. This is a structured letter setting out your claim, the amount sought and a final deadline, typically fourteen days. It is expected practice in England and Wales under the pre-action protocols, and courts look favourably on claimants who send one. In Scotland the terminology and procedure differ, so take advice if the other party is based there.

Going to court, and knowing when to stop

If nothing else works, you can issue a claim. For smaller sums, the small claims track (or simple procedure in Scotland) is designed to be manageable without a solicitor, though fees and time still add up. Keep an eye on deadlines: in England and Wales you generally have six years from the breach to bring a simple contract claim, and five years in Scotland.

Before you file, do a hard-headed cost-benefit check. Can the client actually pay? Is the sum worth the months of attention? A judgment is only as useful as the other side's ability to settle it. Where the money is significant, or the contract is complex, a short consultation with a solicitor will usually pay for itself. Protect your position promptly, keep your records tidy, and do not let a bad client quietly cost you more than the original invoice.