G4S Face Breach of Contract Consequences
David Cameron has pledged to ‘go after’ G4S over the Olympics security chaos, as the Government targeted the firm's £57m management fee. Whilst the Prime Minister said that the government is focused on delivering ‘safe and secure games which will inspire a generation of people’, he also said ‘if companies don't deliver on their contracts then they should be pursued for that money’.
The row over security continues to overshadow the build-up to the Games after G4S boss Nick Buckles made an humiliating appearance before MPs. While the chief executive admitted that there would be financial consequences from the company's failure to recruit enough staff, he insisted it wanted to keep a £57m management fee.
However, sports minister Hugh Robertson said the Government was activating ‘all penalty clauses’ in the contract: ‘The penalty clauses apply to the whole contract, including the management fee’. In another interview, Mr Cameron said: ‘Let's be clear, if G4S don't fulfil their contract we will go after them for the money to make sure that they help pay for the military personnel that have been brought in.’
This was not the run-up to the Olympics that G4S had hoped for. As we await the opening ceremony, at which 80,000 people will cram into the Olympic Stadium, the security firm has confirmed it cannot provide the 10,400 guards needed for the games, falling short by some 3,500 personnel, forcing the Government to scramble members of the Armed Forces to plug the gaps.
So what legal options are available for the Government to seek redress against G4S for falling short on their contractual obligations?
If you have entered into a legally binding agreement and the other party has failed to meet the terms of the agreement, you can seek damages for breach of contract.
Vincents Solicitors are experienced in providing advice in commercial situations such as this, and here's a simple guide highlighting the key issues to consider.
What constitutes breach of contract?
Where a term of the contract is allegedly broken, such as G4S failing to provide the number of security personnel, this is referred to as a 'breach of contract.' Breaches can be minor, material or fundamental, which can often be a matter of degree, although the real distinction is that a fundamental breach entitles the party to terminate the contract altogether.
What damages can be claimed for breach of contract?
A Court can award damages if it finds that there has been a breach of contract. The amount of damages will reflect the actual loss, which has been sustained as a result of the breach. The loss must be provable and must actually result directly from the breach.
Whilst there are precedents, each case depends on its own facts. Generally, there is a six-year period within which you can bring a claim.
Is it worth claiming?
We won’t waste your time, simply flying a kite to bring an action that may not have the legal integrity to be successful. We’ll give you an opinion, at no cost, within 48 hours. We have significant experience and expertise in the field of Contract Law, and at the outset we will only advise you to proceed where you have a very good chance of success. We also advise you against incurring any legal costs where these can be avoided, as litigation can be a risky and costly business.
What can I claim for?
In effect, you can claim for whatever you have lost. The court will award damages to put you back in the position you would have been, had the breach never have occurred. But there is an issue as to what can actually be proven.
Similarly, it can sometimes be more difficult than appears at first look to calculate what the losses are. However, that alone should not put you off. In the event that your claim is worth less than £5000, your claim will generally be heard in the Small Claims Court and is not a matter we would deal with. Anything over £5000 is where we can hopefully ensure you avoid paying any legal costs.
We would be happy to review any potential case of breach of contract and provide you with an immediate, informed view completely free of charge and with no obligation. At this stage, all we need from you are the bare facts. We won't waste your time if we don't believe that you have a reasonable claim, but if you do have a good claim then we will be able to help you find excellent legal advice, whatever the state of your finances.