What should you do when there is a breach of contract?

What you can ask for

The Spanish Civil Code (“Código civil”) allows the party that has performed to choose between two courses of action and to claim damages and interest under either of them:

• Demand performance. The contract continues, the other party has to do what it owed and pays you for the losses caused by the delay or by what it did badly.
• Terminate the contract. It is undone and each party returns what it received, money with interest. The party in breach also pays damages.

If you chose performance and it later becomes impossible, you can still seek termination. Damages cover what you have lost and what you have failed to earn, for example the expenses you incurred because of the contract or rent you did not receive. A party that knowingly failed to perform is liable for all the losses it causes. Otherwise, only for those that could be foreseen when the contract was signed. They have to be proved, unless a penalty clause fixes them in advance. While the other party fails to perform, you can stop performing whatever depends on it, but only in proportion. With defective building work, for example, you can withhold what it will cost to repair it, but not the whole price if the work is fit for the purpose for which it was commissioned.

When the contract can be terminated

Only when the breach is serious, what the courts call a breach justifying termination (“incumplimiento resolutorio”), because it defeats the purpose of the contract or deprives the party that performed of what it could reasonably expect. That is the case with doing nothing of what was promised, a delay that makes the contract pointless or defects that prevent the thing or the service from being used. The party terminating must have performed its own side or be willing to do so. The Spanish Civil Code does not require prior notice, but the courts consider whether the other party was given a reasonable opportunity to perform. If you terminate and the judge considers that the breach was not that serious, you become the party in breach.

In Catalonia these rules apply to almost all contracts, because the “Código Civil de Cataluña”, the Catalan Civil Code, has no general rules on breach. But sales and exchanges signed since 2018 are governed by the rules of the Catalan code:

• Each party can demand performance, which includes repair or replacement of what was sold, suspend its own performance or terminate the contract. In every case it can also claim damages. The buyer can also ask for a price reduction.
• The contract can be terminated by simple notice if the other party's breach substantially deprives the party terminating of what it was entitled to under the contract. In the case of a minor delay, a reasonable additional period can be given and the contract terminated if performance does not take place within it.
• If, in the sale of a property, it was agreed that non-payment of the price terminates the sale, the seller must first formally require the buyer, by means of a notarial record (“acta notarial”), to pay within twenty days, warning that if they do not the sale will be terminated.

In most of the rest of Spain, sales are also governed by the Spanish Civil Code, which has its own rules for the sale of property.

The steps

If the other party fails to perform, it is advisable to proceed in this order:

• Check what the contract says about deadlines, penalties, notices and termination.
• Demand performance in writing within a reasonable time, by a method that leaves a record, such as a “burofax”, a certified letter with proof of content.
• Gather evidence of the breach and of the losses.
• If you decide to terminate, give notice in writing and explain the reason.
• If there is no agreement, you can bring a claim in court. Since 3 April 2025, you generally have to try to reach an agreement first, for example through a written proposal or mediation. In Catalonia the general time limit for bringing a claim is ten years.