Contractual defaults

Salford Supporting People team statement of intent and acknowledgement:

The decision to default should be a considered process. Salford City Council Supporting People Team will endeavour to deal with all defaults to contract with the same sensitivity, transparency and accuracy.

This document has been developed in line with the requirement to issue default notices, where contract breaches have occurred, and as we move into the contract management phase of the Supporting People Programme from 2006/07 onward.

Definition and rationale:

A default is a breach of contract terms and conditions. The definition of default is: “Failure to perform a task or fulfil an obligation”.  Either party can default on the contract, and measures must be in place to deal with any such breaches of contract. Processes being in place allow the contract to be terminated in the event of a persistent or serious default that either cannot or has not been remedied. The specifications of the contract must be clear and concise so as to ensure that it is obvious to all parties what constitutes a breach of contract.

The contract must be written with certain important specifications that are to be managed; whether these are universal, service specific or performance related. The objectives to be managed must be measurable, so it is clear to all whether or not it has been achieved.

If a contractor can prove that they were not in default or that the failure to perform was excusable (i.e. circumstances were beyond their control) the default must be withdrawn.

It is a contractual right to completely or partially terminate a contract because of the contractor’s failure to perform its contractual obligations. However, the following points must be considered:

1. The terms of the contract and applicable laws and regulations
2. The specific failure and excuse for this failure
3. The provider has been given reasonable amounts of time to remedy the situation
4. The availability of services of this nature from other providers
5. The urgency/demand for this service and its strategic position
6. The effect of termination on service users
7. Any other relevant facts and circumstances

When default termination is being considered legal advice should be sought to ensure the propriety of the proposed action.

See document below for more information on different types of defaults.

This page was last updated on 16 July 2010