When a party fails to perform their contractual obligations, the aggrieved party may have the right to sue for breach of contract. Under Australian law, this process allows individuals and businesses to seek compensation or enforce performance through the courts.
Understanding when a breach is legally actionable — and how to prove it — is essential before filing a claim.
What Constitutes a Breach of Contract?
A breach of contract occurs when one party fails to fulfil an agreed term of a valid and binding contract. This could include not delivering goods, failing to pay, or performing services below agreed standards.
For a claim to succeed, the plaintiff must establish:
- A legally enforceable contract existed.
- The defendant breached a term of that contract.
- The breach caused measurable loss or damage.
Australian courts distinguish between minor, material, and fundamental breaches, each carrying different legal consequences. A minor breach may only allow for limited damages, while a fundamental breach may justify contract termination and full compensation.
When Can You Sue for Breach of Contract?
A party may sue when:
- A breach has occurred that results in financial or operational harm
- The breach relates to a key (or “essential”) term of the contract
- Negotiations or informal remedies have failed to resolve the dispute.
Not every broken promise warrants litigation. If the breach is trivial or has minimal impact, alternative resolution methods — such as mediation or negotiation — may be preferable. Courts generally encourage parties to explore these avenues before pursuing formal litigation.
Steps to Take Before Suing
Before commencing legal proceedings, it is essential to:
- Review the contract: Confirm that the clause breached is legally enforceable and has not been lawfully varied or terminated.
- Gather evidence: Retain emails, invoices, delivery notes, and any correspondence that demonstrates the breach.
- Attempt resolution: Send a formal demand letter outlining the breach, damages claimed, and deadline for compliance.
- Seek legal advice: Engage a commercial contract lawyer to assess the merits of your case and estimate potential remedies.
These preliminary steps not only strengthen your position in court but also demonstrate good faith, which can influence costs and outcomes. If the dispute concerns a property or construction agreement, it may also be wise to find a property lawyer who understands the contractual and statutory obligations involved.
How to File a Lawsuit for Breach of Contract?
Filing a breach of contract claim in Australia typically involves the following stages:
- Statement of Claim: The plaintiff files a Statement of Claim in the relevant court (often the Local, District, or Supreme Court, depending on the claim size).
- Service on Defendant: The claim must be formally served on the other party, giving them an opportunity to respond.
- Defence and Counterclaim: The defendant may dispute the allegations or file a counterclaim alleging the plaintiff also breached.
- Discovery and Evidence: Both sides exchange documents and evidence supporting their positions.
- Hearing or Trial: The court reviews evidence, hears witness testimony, and determines liability and remedies.
Throughout this process, compliance with procedural rules and time limits — known as statutes of limitations — is critical.
Time Limits for Suing (Statute of Limitations)
In most Australian jurisdictions, the Limitation Act 1969 (NSW) and equivalent state legislation impose a six-year limit from the date of breach to commence proceedings.
However, some contracts (such as deeds) may have a longer limit — often 12 years.
Missing this deadline can permanently bar recovery, regardless of the claim’s validity. It is therefore vital to obtain timely legal advice.
Evidence Required to Prove Breach
To successfully sue, the claimant must prove on the balance of probabilities that a breach occurred and caused identifiable loss. Key forms of evidence include:
- The written contract (or communications proving oral agreement)
- Records of performance (or non-performance)
- Witness statements
- Expert reports, where necessary, to quantify damages.
Courts rely on objective evidence — not assumptions — to establish contractual liability.
Possible Remedies When You Sue for Breach of Contract
When suing for breach, available remedies for breach of contract include:
- Damages: Monetary compensation to cover losses resulting from the breach.
- Specific Performance: Court order requiring the breaching party to perform their contractual duty.
- Injunction: Order restraining further breaches or enforcing compliance.
- Rescission: Cancelling the contract and restoring both parties to their pre-contract positions.
Damages remain the most common remedy, but courts may apply equitable principles if money alone cannot achieve justice.
Cost of Suing for Breach of Contract
The cost of litigation varies depending on the complexity of the case, the court level, and whether legal representation is required. Typical expenses include:
- Filing and service fees
- Legal representation costs
- Expert witness fees.
While costs can be substantial, courts may award costs to the successful party, partially reimbursing their legal expenses.
Small claims under a certain threshold (e.g., $100,000 in NSW) can often be heard in lower courts or tribunals, reducing costs.
Can Small Businesses Sue for Breach of Contract?
Yes. Small businesses regularly bring breach of contract actions to recover debts, unpaid invoices, or damages for non-performance.
Many such disputes are heard in the Local Court or Civil and Administrative Tribunal (NCAT), where proceedings are less formal and more cost-effective.
Legal guidance ensures that claims are properly structured and supported by evidence, avoiding procedural pitfalls.
Alternatives to Litigation
Litigation is not always the best course of action. Alternatives include:
- Mediation: A neutral mediator facilitates a settlement discussion between parties.
- Arbitration: A private tribunal hears the dispute and issues a binding decision.
These methods are generally faster and less costly, helping preserve business relationships while achieving enforceable outcomes.
Defences to a Breach of Contract Claim
A defendant may avoid liability by proving:
- No valid contract existed
- The contract was frustrated by unforeseeable events
- Performance was impossible due to external circumstances
- The plaintiff failed to mitigate their losses.
Understanding potential defences helps plaintiffs anticipate challenges and strengthen their case before filing.
When Suing May Not Be Advisable?
Pursuing legal action may not be practical when:
- The amount in dispute is small relative to legal costs
- The defendant lacks assets to satisfy judgment
- The breach is technical with minimal damage.
In such cases, negotiation or settlement may yield a better commercial outcome.
FAQs
Before initiating proceedings, parties often ask key practical and legal questions. Below are concise answers to the most common ones.
What constitutes a breach of contract legally?
A breach arises when one party fails to fulfil a valid and binding contractual obligation, causing measurable loss to the other party.
Can a small business sue for breach of contract?
Yes. Small businesses may pursue claims through local courts or tribunals, which provide simplified procedures and lower costs.
What evidence is needed to prove a breach?
The claimant must produce the contract, proof of non-performance, and documentation of losses directly linked to the breach.
When is suing for breach of contract not advisable?
It is not advisable when the costs of litigation exceed potential recovery or when the breach causes negligible financial impact.
Can I sue for breach of contract without a lawyer?
While self-representation is possible, professional legal guidance ensures procedural compliance and maximises the likelihood of success.
Conclusion
To sue for breach of contract in Australia, the plaintiff must demonstrate a valid contract, a proven breach, and resulting loss.
While courts offer strong protection for contractual rights, success depends on evidence, timeliness, and a well-prepared legal strategy.
For guidance on pursuing or defending a breach of contract claim, contact LegalFinda to connect with experienced commercial contract lawyers who can assess your case and recommend the most effective legal pathway.
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