Damages for Breach of Contract: When Can You Claim Them?

^{Prepared by Benjamin Rose, Solicitor, on behalf of Acumen Law's Dispute Resolution Team}

^{Last Reviewed: 7 November 2025}

A supplier fails to deliver critical materials, costing you business £15,000 in lost sales. Can you recover this? In most cases yes - but only if you can prove the loss was foreseeable, caused by the breach, and that you took reasonable steps to minimise it. This guide explains exactly when you can claim breach of contract damages in England and Wales, and how much you might recover.

You can claim breach of contract damages in England and Wales when a valid contract exists, the other party breached it, you suffered loss, and that loss was foreseeable and directly caused by the breach. You must also take reasonable steps to minimize your losses.

What constitutes a Breach of Contract?

A breach occurs when a contractual obligation is not performed as agreed. Breach may be:

Actual: performance is late, defective, or not provided.

Anticipatory: a party indicates before the due date that it will not perform.

Example: A Brighton restaurant orders 50 chairs for £2,000, due by 1 May for their grand opening. The supplier delivers on 15 May.

What the restaurant can claim:

• £700 hire costs for temporary seating (14 days x £50/day).
• £150 delivery surcharge for emergency rental.
• Total recoverable: £850

What they cannot claim:

• £5,000 in "lost opening weekend profits" (too remote without clear evidence the supplier knew about the opening date).
• £2,000 for "reputational damage".

Types of Damages You Can Claim

Compensatory Damages

The primary measure aims to place you in the position you would have been in had the contract been performed. This includes:

Expectation loss: the promised benefit (e.g., difference between contract price and market/cover price).

Reliance loss: wasted expenditure reasonably incurred in reliance on the contract.

Consequential loss: additional losses flowing from the breach that meet the remoteness test.

Example: You contract to buy steel at £900/tonne. The seller fails to deliver. You buy equivalent steel at £1,050/tonne. You can claim the £150/tonne difference plus reasonable additional logistics costs caused by the breach.

Interest on Damages

Courts may award interest on damages (Section 35A Senior Courts Act; Section 69 County Courts Act 1984). For unpaid invoices (a debt, not unliquidated damages), statutory interest and fixed charges may apply under the Late Payment of Commercial Debts (Interest) Act 1998.

Liquidated Damages

A pre-agreed sum payable on breach (e.g., delay damages). Enforceable if it protects a legitimate interest and is proportionate. A clause that is extravagant or out of proportion risks being an unenforceable penal.

Example: A software services contract sets £2,000 per week for late delivery, capped at 10% of fees. If the supplier is three weeks late, £6,000 is likely recoverable, subject to the clause not being penal.

For disputes over payment terms specifically, see our guide on unpaid invoices and letters before action.

Nominal Damages

Where breach is proven but no loss is shown, the court may award a nominal sum (e.g., £1). Other remedies (e.g., specific performance or an injunction) may be more appropriate depending on the breach.

Example: A supplier misses a non-critical milestone but you suffer no quantifiable loss. You may receive nominal damages only.

The Test for Recovering Damages (Hadley v Baxendale)

Recoverability turns on causation, remoteness, and mitigation.

Causation: the breach must be an effective cause of the loss.

Remoteness: loss is recoverable if it (i) arises naturally in the usual course of things (the "first limb"), or (ii) was within the reasonable contemplation of both parties as a probable result of breach due to special knowledge at contracting (the "second limb"). Assumption of responsibility can refine this analysis in some contexts.

Mitigation: you must take reasonable steps to reduce loss. You cannot recover avoidable loss. Reasonable mitigation costs are recoverable.

Example: You tell a printer that a brochure must arrive by a fixed date for a trade show. Late delivery makes the stand ineffective. Lost stand fees and reasonable replacement costs may be recoverable. A claim for long-term "brand damage" is unlikely without clear evidence and foreseeability.

What You Cannot Claim (Remote/Punitive Damages)

Remote losses: losses outside the reasonable contemplation of the parties at the time of contracting

Punitive/exemplary damages: not awarded for breach of contract in the UK.

Betterment: you cannot profit from the breach; allowances may be made where replacement improves your position.

Double recovery: not permitted.

Example: A café claims £20,000 for "lost future profits" from regulars who allegedly stopped visiting after a delayed fit-out. Without contemporaneous evidence and foreseeability at the time of contracting, this head of loss will likely be treated as too remote.

Time Limits for Breach of Contract Claims

Simple contracts: six years from the date of breach (Section 5, Limitation Act 1980)

Deeds: twelve years from the date of breach (Section 8)

Instalments/continuing obligations: each breach has its own limitation period.

Contractual limitation periods: parties may agree shorter periods; these are often enforceable.

Acknowledgment or part-payment: may reset limitation for debts.

Example: A long-term supply agreement breached on 1 June 2020. A damages claim for that breach must be issued by 1 June 2026 (simple contract), subject to any agreed contractual limitation period.

Steps to Take Before Legal Action

1. Collect the contract documents: the signed contract, schedules, variations, emails, and purchase orders.
2. Check key terms: scope, price, delivery/acceptance, limitation of liability, liquidated damages, notice provisions, and dispute resolution.
3. Quantify loss: set out the calculation, assumptions, and supporting evidence (invoices, market quotes, management accounts).
4. Mitigate: source replacements, re-schedule works, or adopt interim measures where reasonable, and record decisions.
5. Send a compliant letter before claim: meet the relevant pre-action protocol, set a response window, and offer alternative dispute resolution.
6. Preserve evidence: hold correspondence, messaging data, logs, and audit trails.
7. Consider security and enforcement: credit checks, retention of title, guarantees, insurance notifications, and interim relief where appropriate.

For employment contract breaches, our settlement agreements guide covers the process.

When to Instruct a Solicitor

Early advice is useful where:

• The contract contains liability caps, exclusions, or liquidated damages that may control recovery.
• Loss includes alleged consequential loss, loss of profits, or data/business interruption.
• There are cross-border issues or multiple contracts in a supply chain.
• You need urgent relief (e.g., specific performance, delivery up, or an injunction).
• You face insolvency risk or need to preserve assets.
• You require a standstill agreement to protect limitation.

A contract dispute solicitor can assess recoverability and evidence, pressure-test quantification, and structure negotiations.

If the breach is minor and involves a debt under £10,000, you may be able to use the small claims track - see our guide on recovering unpaid invoices.

Remember: Well-prepared claims settle faster and on better terms. Gather your evidence, quantify your loss clearly, and seek early advice on your prospects of recovery.

Frequently Asked Questions

How much compensation can you get for breach of contract in the UK?

There is no fixed amount. Damages aim to place you in the position you would have occupied had the contract been performed. This usually covers direct losses (e.g., cover costs, difference in value) and any further loss that is caused by the breach, reasonably foreseeable, and properly evidenced.

Can you claim for distress in a breach of contract case?

Generally no in commercial contracts. Non-pecuniary damages are awarded only where a central purpose of the contract is peace of mind, enjoyment, or freedom from distress. Business inconvenience or upset is not usually compensable in contract.

What is the penalty rule in contract law?

A damage clause is enforceable if it protects a legitimate interest and imposes a proportionate remedy. A clause that is out of proportion to that interest is an unenforceable penalty.

Do you need a solicitor for a breach of contract claim?

Not in every case. Legal advice is advisable where the contract contains exclusions or liability caps, where loss involves profit, business interruption or multi-party chains, or where the sums or risks are material. Early advice can clarify recoverability, quantification, and strategy.

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