Breach of Contract vs Negligence: 5 Key Differences

Contracts are a standard part of business practice, and they’re very much needed to set out standards and determine expectations. While contracts are there to prevent things from going wrong, it’s inevitable that mistakes will happen in business. But determining whether mistakes are a breach of contract vs an act of negligence can be a fine line. 

As leading negligence solicitors, we’re vastly experienced in determining whether a wrong is a breach of contract or an act of negligence. In this article, we’ll cover what is meant by each term and what the key differences are between them.

What Is a Breach of Contract?

In the simplest terms, a contract is a legally binding document between two or more parties. For a contract to be valid, it must include an offer and an acceptance. In the example of a worker’s contract, the offer is made by the employer and accepted by the employee. The agreed terms will set out what is expected of the employer (salary, company policies, working conditions) and what is expected of the employee (working hours, duties, conduct). 

A breach of contract occurs when any agreed-upon terms within the contract are violated. Examples of breaching a contract include:

• Failure to pay within the agreed terms
• Failure to complete work by an agreed deadline
• Completed work not being up to the agreed standards  

What Is Negligence?

Negligence goes beyond agreed terms and occurs when one party’s careless actions cause harm to another. Harm can be physical, mental and even financial, meaning that harm could come in the form of damage to a business’s reputation or damage to property. To prove negligence has occurred, four elements must be proved:

1. There was a duty of care from one party to another
2. This duty of care was breached due to the careless acts of the defendant
3. The breach directly caused harm to the claimant
4. Damage or injury occurred 

When Breach of Contract and Negligence Overlap

When it comes to breach of contract vs negligence, there’s no doubt that the two overlap. Often, a breach of contract can trigger negligence. Let’s consider an IT company providing services to a client. If the IT company doesn’t deliver a secure system with the requested features, then a breach of contract has occurred. But if the missing features mean that the system is prone to hacking and results in confidential data being exposed, this would be an example of not exercising reasonable care. 

In this instance, the client could claim a breach of contract based on the basis that the work didn’t meet the agreed standards, but they could also claim negligence due to the data leak harming the business’s reputation. One of the key things here is that members of the public who had their data exposed could also claim negligence, despite not being involved in the breach of contract.

5 Key Differences Between Breach of Contract and Negligence

1. Source of the Duty

Breach of Contract: The duty arises from the agreement between the parties. For example, a contract between a web design agency and its client states a clear date for website designs to be delivered.

Negligence: In negligence cases, the duty comes from the law. For example, a construction company is legally required to provide PPE and could be found negligent if a worker is injured due to a lack of protective equipment.

2. Who Can Bring a Claim

Breach of Contract: Only the parties who enter into the contractual agreement can bring a breach of contract claim.

Negligence: You don’t have to be involved in a contract to bring a negligence claim; third parties can also be impacted by negligence. For example, if a delivery driver causes a road accident due to running a red light, anyone involved in the accident could bring a negligence claim. 

3. Nature of the Wrong

Breach of Contract: The wrongdoing in a breach of contract relates to the failure of contractually agreed actions being met. For example, an agreed deadline is missed.

Negligence: Negligence occurs when individual’s actions fall below what is expected of them, such as an electrician leaving faulty wires on display.

4. Type of Harm

Breach of Contract: The type of harm caused by a breach of contract must directly relate to the agreed terms. More often than not, this is financial where a breach causes loss of earnings for one party.  

Negligence: While negligence can cause financial harm, the impacts can expand to physical damages and injuries that have been caused by the careless acts of an individual/group of individuals.

5. What Must Be Proven

Breach of Contract: To prove a breach of contract, the first step is to prove a valid contract. This contract must then be used to prove where one party has failed another party in terms of meeting an agreed action that has subsequently impacted another party.

Negligence: Proving negligence comes down to proving four elements: there was a duty of care, this duty of care was breached due to carelessness, the breach caused harm and this harm resulted in damage (physical, mental or financial).

Summary of Breach of Contract vs Negligence

Final Thoughts

There’s a fine line between breaching a contract and being negligent. Ultimately, a breach of contract comes down to breaking a pre-agreed condition that can later be proven. In comparison, acts of negligence can occur outside of a contract and involve harm caused by the careless actions of one or more individuals. However, there can be a distinct crossover between the two and, as pointed out in this article, one can often trigger the other.     

If you think you’ve experienced either a breach of contract or negligence, don’t hesitate to contact our team at Bond Turner for free, impartial advice.