Contract disputes
Somebody promised something and did not do it. That is where a contract dispute starts. We look at the agreement, the correspondence and whatever other evidence exists, to establish what was promised and what happened.
General information, not legal advice. This page sets out how the law generally applies. It does not take account of your circumstances, and you should get advice about your own situation before acting on it. The official sources this page is written from are listed on it; where they differ from anything here, they are the authority.
Two questions before the law
Most people reading this have already had the argument. Work was not finished, or was finished badly. An invoice was not paid. A supplier walked away. Someone says the agreement said one thing and you say it said another. What you want to know is whether you can do something about it, and whether doing something is worth it.
Start with proof. A contract claim is built out of documents: the agreement or the quote, the emails and messages around it, the invoices, the variations, the photographs, the bank records. If you can show what was agreed and what was delivered, you have the makings of a claim. If the only record is a conversation nobody wrote down, the claim is not impossible but it is much harder, and honest advice has to say so at the start.
Then ask whether the other side can pay. A judgment is an order to pay, not the money itself. Against a company with no assets, or a person who has none, it can be worth very little. Checking that before you spend anything is not pessimism; it is the single most useful hour in a small civil matter.
The third question is the clock. Under section 14 of the Limitation Act 1969 (NSW) a cause of action founded on contract must generally be brought within six years of the date the cause of action first accrues. For breach of contract that date is usually the breach itself. Some causes of action run on different periods, and a claim founded on a deed runs longer. If you think any part of your dispute is more than a few years old, say so in your first message.
What the work actually is
Working out what the contract says
Before anyone argues about a breach, the terms have to be established: what was agreed, in which document, and whether anything later varied it. That includes terms the law implies and clauses that limit liability, cap loss or require a dispute to go somewhere else first.
Testing the claim against the evidence
We go through what you can actually prove, in the order a court would: formation, terms, breach, causation, loss. A claim that is strong on the story and thin on the documents is a claim to know about before you commit money to it, not after.
Checking the clock and the defendant
Whether a limitation period under the Limitation Act 1969 (NSW) has run or is close, and whether the other party is a person, a company or a trustee, and whether there is anything to recover from. Both answers change what is worth doing.
Trying to resolve it first
A well-drafted letter of demand or a negotiation resolves a great many contract disputes without proceedings. Our guide to what a letter of demand should and should not say sets out what goes in one and what makes a matter harder later.
Running it properly if it has to run
Preparing and filing the statement of claim, pleading the terms and the breach as the Uniform Civil Procedure Rules 2005 (NSW) require, dealing with the defence, and keeping the cost of each step against what is in dispute.
Defending a claim made against you
The same work in reverse: whether the contract is what the other side says it is, whether the breach is made out, whether the loss claimed follows from it, and whether the limitation period has already expired.
Questions people ask first
We never signed anything. Do I still have a contract?
Possibly. A contract can be formed in writing, by what people said, or by a mixture of both, and quotes, emails, purchase orders and messages are often enough to show what was agreed. The difficulty is proof rather than principle. Some contracts must be in writing to be enforceable, particularly dealings with land, so the answer depends on what the agreement was about.
How long do I have to sue?
Section 14 of the Limitation Act 1969 (NSW) sets six years for a cause of action founded on contract, running from the date the cause of action first accrues, which for breach of contract is usually the date of the breach rather than the date you discovered it. Other causes of action have different periods and a claim on a deed runs longer. If a date may be close, raise it in your first message rather than waiting for an appointment.
Which court will it go to?
Mainly the amount in dispute decides. The Local Court, District Court and Supreme Court each have a monetary limit, and the type of claim matters too — an injunction or a claim in equity usually belongs in the Supreme Court. The courts publish their own current limits, and our guide to which court hears your claim explains how the structure works.
Can I claim what the breach cost me in lost profit?
Damages for breach of contract are generally intended to put you in the position you would have been in had the contract been performed. Not every consequence is recoverable: loss that is too remote, or that you could reasonably have avoided, usually is not. This is one of the areas where the honest early answer is a range, not a figure.
The contract says we must mediate before going to court. Does that matter?
Yes. A dispute resolution clause is a term of the contract like any other, and ignoring it can cost you. Courts in New South Wales also actively encourage parties to resolve matters without a hearing, and the Civil Procedure Act 2005 (NSW) allows a court to refer proceedings to mediation. Read the clause before you send anything.
If I win, do I get my legal costs back?
Sometimes, in part. A court has a discretion about costs and often orders the unsuccessful party to pay some of the successful party’s costs, but recovery is rarely complete and it still depends on the other side being able to pay. Never run a matter on the assumption that costs will come back. Our costs page explains how this works.
The other side is a company that looks empty. Is it worth it?
That is the right question to ask first. A judgment against a company with no assets is an expensive piece of paper, and enforcement costs money of its own. Searches can tell you something about a company before you spend anything, and we would rather tell you a claim is not worth running than run it.
What to bring
Contract disputes are usually decided on documents. The more complete the record, the faster you get a real answer.
- The contract, quote, purchase order or terms and conditions, in whatever form it exists.
- Every email, message and letter between you about the work, including the ones that do not help you.
- Invoices, receipts, bank statements and anything showing what was paid and when.
- Any variation, extension or side agreement, and how it was recorded.
- Dates: when the agreement was made, when the work was due, when it went wrong, when you complained.
- Photographs, reports or inspections, where the dispute is about quality of work.
- The other party's full legal name, and whether it is a person, a company or a trust.
- What you actually want: the money, the work finished, or simply to be left alone.