How to Seek an Injunction to Prevent a Breach of Contract

In Short

• Injunctions can prevent someone from breaching a contract by requiring them to do or stop doing certain actions.
• Courts may grant injunctions if there is a serious issue to be tried, a risk of harm if the injunction is not granted, and the balance of convenience favours the injunction.
• There are two main types: prohibitory injunctions (to stop an action) and mandatory injunctions (to compel an action).

Tips for Businesses

Consider seeking an injunction if a contract breach is imminent and could cause significant harm. Ensure you have solid evidence of the breach and be prepared to demonstrate that an injunction is necessary to prevent serious damage. Consulting a legal professional can help in assessing your case and the likelihood of success.

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Table of Contents

• What is an Injunction?
• Mandatory Injunctions
• Interlocutory Injunctions
• Key Takeaways
• Frequently Asked Questions

As a business, your contractual relationships with customers or suppliers are not just critical, they are the very backbone of ensuring your business operates smoothly. For a manufacturing company, investing time, effort and significant resources to secure an exclusive supply agreement with a major retail chain is essential. If you discover the retailer is deciding to engage in dealings with your competitors to sell similar goods, the retailer would eventually be in clear violation of the exclusivity clause. Such a breach could be catastrophic, jeopardising your entire investment if competitors beat you to market. You may not want to obtain monetary damages – you just wish the retailer to stop what they are doing. In other words, you are seeking an injunction from the court. 

An injunction is an equitable order requiring a party to do or stop doing a specific act. This article explains how to obtain an injunction to prevent a breach of contract and outlines the legal procedures, ensuring the process is clear and fair.

What is an Injunction?

The court can grant injunctions when a party to a contract has agreed not to do something. An injunction can either stop a party from breaching a contract or prevent a party from continuing or repeating a breach that has already occurred. This is known as a prohibitory injunction.

Before ordering an injunction, it must be proven that an award of damages is not an adequate remedy. This test has a very high threshold. Traditionally, injunctions were granted only to protect a party’s proprietary rights. However, case law has broadened the use of injunctions, which now extend beyond just protecting proprietary rights.

Mandatory Injunctions

You can use injunctions to stop harmful actions before they happen, but sometimes things may have already gone wrong. In such cases, the court can order a mandatory injunction. This requires the breaching party to undo their wrongs or repair the consequences of their actions. Essentially, returning to the original state of affairs. There are two kinds of mandatory injunctions: 

• mandatory restorative injunctions; and
• mandatory enforcing injunctions.

A mandatory restorative injunction requires the party in breach to correct the impact of their actions.

Before issuing such an order, the Court will consider factors such as, whether:

• the other party knew their actions were wrong;
• the time to complete the act was sped up;
• you will face hardship and difficulties if the injunction is not granted;
• the other party will face hardships if the injunction is granted; and
• a payment of money would be sufficient.

Mandatory enforcing injunctions require the other side to perform certain actions. These court orders do not just prevent action but need it. Such injunctions must meet a high standard and are generally granted only when a remedy called ‘specific performance’ would also be available.

Interlocutory Injunctions

Restoring your original position or compelling the other side to meet their obligations is beneficial. However, there may be times when you need the breaching party to stop their actions while you resolve the dispute. In this situation, you require an interlocutory injunction. Courts grant interlocutory injunctions urgently to prevent the other side from continuing any work before the Court has made its final decision.

Before a court grants an interlocutory injunction, you must meet two requirements:

• you must present evidence indicating that you are likely to win the case if you pursue legal action against the other party; and
• you must demonstrate that you will face greater harm if the court refuses the injunction than the hardship imposed on the other party if the injunction is granted.

Commonly, you must agree to cover the damages suffered by the other side if your matter is improper or mistaken. You must promise the court that you will compensate the other party for temporarily restraining their actions by granting you an interlocutory injunction. 

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Key Takeaways

An injunction is an essential legal tool used to address breaches of contract. It can either prevent a party from continuing a breach (prohibitory injunction) or compel them to correct their actions (mandatory injunction). To secure an injunction, you must demonstrate that monetary damages alone are insufficient and, for interlocutory injunctions, that you are likely to succeed in your case and face greater harm without the injunction than the opposing party would with it.

If you need assistance seeking an injunction to prevent contract breaches, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions