Breach of Contract: Apportionment of Liability
A contract is an agreement between two or more parties to a specific undertaking on specific terms. Where there is a breach of that contract, it is necessary to apportion liability. In most cases, parties to a contract are equally liable for any breach, however, there are certain circumstances where the parties can divide liability between them.
The first situation where parties to a contract can apportion liability for a breach of contract is if there is an actual or implied clause in the contract specifying how breach of contract liability should be divided. These clauses are usually present in more complex contracts and vary from contract to contract. When such a clause is implied, it is usually determined by the intention of the parties which can be interpreted from the other clauses in the contract. However, when an actual clause is present, it will usually specify how liability shall be divided and should be given more weight than other clauses in the contract.
The second situation where parties to a contract can allocate liability is if the parties reach an agreement on how to divide liability for a breach. This is commonly done in complex contractual relationships where it is important to maintain the relationship between the parties or otherwise address any economic disparity. In such cases, parties typically engage in negotiations and attempt to come to a mutually agreeable solution as to how liability should be divided.
The third situation where parties can apportion liability for a breach of contract is if the court finds that one party is more at fault or liable than the other. This is done when the court finds that one party has a greater responsibility or burden in generating or avoiding a breach. For example, if one party fails to meet a deadline or fulfil other major contractual obligations, the court may find that party more at fault or liable for the breach.
In the case of a breach of contract, it is important for parties to consider how liability should be divided. Failing to do so could result in both parties being held equally liable for the breach. It is important for parties to consider both actual and implied clauses when determining how liability should be divided and if necessary, engage in negotiations to reach an agreement between the parties. If an agreement cannot be reached, the court may intervene and apportion the liability between the parties based on a finding of fault or liability.