When a contract goes wrong

How to re-negotiate a contract

With some contractual disputes you may need to consider re-negotiation and compromise.

  • Think twice before threatening action you are not prepared to take, in case your bluff is called.
  • Know when to enlist outside help, eg from a solicitor or other expert.
  • Never admit in correspondence that you were or may be in breach of contract unless you do this in a letter clearly headed 'WITHOUT PREJUDICE'. If you do not do this, the other party to the contract may be able to use your admission against you in court proceedings which may weaken your case.
  • Keep clear notes of telephone discussions and copies of letters and emails.
  • Always respond to letters, emails and telephone calls promptly, and if you have set a deadline, always make sure you follow it up without delay.
  • When you reach agreement, make sure this is written down and signed by both parties as an amendment to the agreement (if appropriate) or else in other cases as an exchange of letters. Such a letter should begin "I refer to our previous discussions about the (contract dated) and set out below the amended terms we have agreed. If you are happy that these reflect what we have agreed, please sign and return the enclosed spare copy of this letter."
  • In a case where there have been money claims or claims of breach of contract or threats of legal proceedings, you should make it clear in the settling agreement/letter that the new arrangements have been accepted by both parties "in full and final settlement" of any claims by either party to date. This will ensure that neither party can try to resurrect an old claim later.
  • In cases where both parties have agreed that the contract will be brought to an end, appropriate wording might be: "As discussed, we have agreed that the (contract dated) be ended by mutual consent with neither party having a claim against the other."
  • If attempts at compromise or re-negotiation fail, you may find yourself going to court.

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