Breach of contract: your rights and options

An agreement is not just an agreement. When your partner does not deliver on time, your supplier sends defective goods, or your consultant disappears with half the work outstanding, what can you do? The answer lies in the rules on breach of contract.

This guide gives you a practical overview of what a breach is, what remedies you have, and what you should do when the other party does not keep their side of the agreement.

What is a breach of contract?

A breach arises when a party does not correctly perform its contractual obligations. It can happen in three ways:

1. Delay

The performance is delivered, but not at the agreed time. Examples:

• The supplier delivers the goods 3 weeks late
• The consultant delivers the report two months after the deadline
• The customer pays the invoice 60 days late

2. Defect (a failure of quality)

The performance is delivered on time, but not correctly. Examples:

• Software that does not work as agreed
• Goods that do not meet the agreed specifications
• Tradesperson work that is not professionally correct

3. Anticipatory breach

It is clear that the party will not be able to perform at the agreed time, even though the deadline has not yet arrived, for example because the other party has gone bankrupt or has openly stated that they will not deliver.

Remedies for breach: what can you demand?

When there is a breach, you have as a rule these remedies, either individually or in combination:

1. Specific performance

You can demand that the other party performs the contract as agreed. It is the first and most natural claim. The other party cannot, however, be forced to perform if it is:

• Impossible
• Disproportionately burdensome for them
• Excluded in the agreement

2. Repair

For defects, the party in breach often has the right to try to put the fault right (repair) before you can cancel. This is an important point: do not jump straight to cancellation without first giving the other party the chance to repair.

3. A proportionate reduction in the price

If the performance is defective, but not so seriously that you want to cancel the contract, you can demand a price reduction corresponding to the relative significance of the defect.

4. Damages

You can claim damages for the loss you have suffered as a result of the breach. Damages require:

• Liability: the breach is attributable to the other party (not force majeure and the like)
• Loss: you have suffered a concrete and documentable financial loss
• Causation: the loss is a direct consequence of the breach
• Foreseeability: the loss was foreseeable to the party in breach

Damages can cover:

• Direct loss (for example extra cost of obtaining the performance elsewhere)
• Operating loss (for example lost turnover as a result of the delay)
• The positive interest in performance (being put in the position as if the contract had been performed)

What is as a rule not recoverable:

• Non-economic loss (normally only in special cases)
• Loss that was not foreseeable
• Loss caused by your own fault

5. Cancellation

The most far-reaching remedy. Cancellation means that the contract is brought to an end, and both parties as a rule must return what they have received.

Cancellation typically requires the breach to be material. Factors in the assessment:

• Is the delay or defect central to the agreement?
• Can you use the performance despite the defect?
• Have you given a reasonable deadline to repair?
• Has the other party breached repeatedly?

A lack of materiality: if the breach is trivial, you cannot cancel, but you can demand a price reduction.

Delay: special rules

Delay is a frequent form of breach. The most important rules:

A fixed delivery time vs. "as soon as possible"

If a fixed delivery time is agreed ("delivery by 15 April"), there is delay from the day after. If only "as soon as possible" is agreed, you should send a reminder and set a reasonable deadline.

Reminder and final deadline

If you want to draw consequences from the delay, you should normally send a written reminder with a final deadline for performance. If the deadline is exceeded, you can invoke the remedies for breach.

Interest on late payment

If it is money that is delayed (for example an invoice that is not paid), you are entitled to interest on late payment from the due date. The statutory rate is the National Bank's lending rate plus 8 percentage points.

Exclusion of liability and force majeure

Many contracts contain exclusion-of-liability clauses:

Exclusion of liability

The other party may have limited its liability in the contract, for example:

• A maximum liability corresponding to the contract sum
• No liability for indirect loss (operating loss, consequential damage)
• No liability in the event of force majeure

Such clauses are as a rule valid in commercial relationships but can be set aside in cases of gross negligence or intent, and they are very limited in consumer relationships.

Force majeure

Force majeure releases a party from liability when the breach is due to extraordinary and unforeseeable events that the party should not have foreseen and cannot overcome: war, natural disaster, pandemic (under certain conditions), strike and so on.

Force majeure typically gives the right to:

• Suspension of performance
• Cancellation if the situation lasts too long

In practice: what do you do when the other party breaches?

Step 1: document

Saved emails, texts, order confirmations, invoices and meeting notes, anything documenting the agreement and the breach, are worth gold. Start documenting immediately.

Step 2: complain quickly

Send a written complaint within a reasonable time after you discover the breach. If you wait too long, it can be interpreted as acceptance.

Step 3: set a reasonable deadline

In the letter, set a reasonable deadline for repair. Make clear what you expect and what the consequence of no response is.

Step 4: be clear about the consequences

State precisely what you will do if the deadline is not met: demand cancellation, obtain the performance elsewhere (and claim the extra cost), bring a case and so on.

Step 5: obtain the performance elsewhere if necessary

If you can obtain the performance at normal prices elsewhere, you should do so (the duty to mitigate). You can then claim the extra cost from the party in breach.

Practical examples of breach

Scenario 1: a consultant delivers late

A consultant is hired to deliver a market analysis by 1 March. By 5 March nothing has been delivered. The customer sends a reminder and sets a final deadline of 7 days. The consultant delivers on 10 March, that is late. The customer accepts the delivery but claims damages for the documented loss caused by the delay.

Scenario 2: a supplier delivers defective goods

A business orders 500 units of a component for production. The goods are delivered on time, but 20% are defective. That is a defect. The business complains immediately, demands replacement of the defective units and damages for the production stoppage. The supplier replaces the goods but refuses to cover the stoppage, citing an exclusion-of-liability clause. The dispute is resolved by negotiation or possibly arbitration, if the contract provides for it.

Scenario 3: anticipatory breach

A partner announces in the middle of a project that the firm is in reconstruction and probably will not be able to deliver. That is anticipatory breach. The loyal party can cancel the contract and obtain the performance elsewhere without waiting for the delivery deadline to expire. The extra cost of obtaining the performance elsewhere can be claimed as damages.

The duty to mitigate

An important principle in Danish contract law is that the injured party has a duty to limit its loss. That means:

• If you can obtain the performance at normal prices elsewhere, you must do so and can claim the extra cost
• You cannot passively let the losses accumulate and then claim it all
• If you do not comply with the duty, the damages claim can be reduced

Overview: types of breach and remedies

Type	Definition	Remedies
Delay	Late delivery	Reminder, final deadline, cancellation, damages
Defect	Faulty performance	Repair, price reduction, cancellation, damages
Anticipatory	A notified future breach	Cancel now, obtain elsewhere, damages
Partial performance	Only part delivered	Price reduction, cancellation of the missing part
Continuing	Repeated breach	Cancellation of the whole contract

Contracts that prevent disputes

The best protection against breach is a clear and precise contract that:

• Specifies the scope of the performance and quality requirements
• States concrete deadlines
• Describes the payment terms and deadlines
• Sets out liability and any exclusions of liability
• Contains a clear breach clause with sanctions

Frequently asked questions about breach of contract

When can I cancel a contract without prior notice?

Cancellation without prior notice is normally only possible on a material breach, and in many cases a prior complaint with a reasonable deadline to repair is required. An exception applies for obvious impossibility, anticipatory breach, or if the contract clearly gives a right to immediate cancellation on specific breaches.

What is the difference between damages and a price reduction?

A price reduction is a reduction in the agreed fee corresponding to the relative significance of the defect. It does not require you to prove a concrete loss. Damages, by contrast, cover a concrete documentable loss and require proof of liability, loss and causation. The two remedies can be combined.

Can I refuse delivery if the other party has breached before?

In some cases. If the other party has breached repeatedly, it can justify requiring prepayment or security for future deliveries, or ultimately cancelling the contract citing the continuing breach.

Are oral agreements legally binding, and can they be breached?

Yes. Oral agreements are as a rule binding under Danish law (section 1 of the Contracts Act). The problem is the burden of proof: if a dispute arises, it is hard to prove the content of an oral agreement. A breach of an oral agreement can be invoked, but your case is far stronger with a written contract.

Summary

A breach of contract can occur as delay, a defect or an anticipatory breach. Your most important remedies are:

1. Specific performance: demand the contract be kept
2. Repair: give the chance to put the fault right
3. Price reduction: for defects that do not justify cancellation
4. Damages: for documented loss resulting from the breach
5. Cancellation: on a material breach

Complain quickly, document everything, and set clear deadlines. A clear contract from the start is the best prevention.

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The content of this article is for guidance only and does not constitute legal advice. Consult a lawyer for advice on your specific situation.