Breach of Contract in Bangladesh — The 2025 Playbook for CEOs, GCs & Founders by TRW Law Firm

Featured snippet (quick answer)

In Bangladesh, a breach of contract occurs when a party fails to perform a promised obligation without lawful excuse. Remedies include damages (expectation, reliance, restitution), specific performance, injunctions, rescission, and declarations. Enforceability hinges on valid formation, proper stamping/registration (where required), evidence of breach, and timely action within limitation periods. Strong contracts pair clear performance standards with liability caps, indemnities, LDs, and a tiered dispute clause (negotiation → mediation → arbitration/court).

Why this guide — and why TRW

TRW Law Firm is Bangladesh’s largest cross-border law firm. From EPC megaprojects and tech platforms to complex supply chains and JV/shareholder fallouts, we handle the full cycle of contract risk: drafting, monitoring, breach response, negotiated exits, litigation, and international arbitration. With integrated teams in Dhaka, Dubai, London, and the U.S., we make your position bankable and enforceable at home and abroad.

Related reading (internal): See our companion guides on Commercial Agreements and Contract Law in Bangladesh via tahmidurrahman.com. A strategic starting point for new ventures is our guide to Company Formation in Bangladesh.

1) The legal backbone: what counts as a breach

Bangladesh follows classic contract principles (rooted in the Contract Act, allied statutes, and common-law reasoning):

• Non-performance: a promised act isn’t done at all or is done late.
• Defective performance: the act is done, but below contractual standard (e.g., quality failure, uptime shortfall, code defects).
• Repudiation / anticipatory breach: a party clearly indicates (by words or conduct) they won’t perform when due; the other party may treat the contract as terminated and sue immediately.
• Material vs. minor breach: a material breach goes to the root of the bargain and typically triggers termination rights; a minor breach calls for damages/price adjustment but not termination.
• Condition vs. warranty: breach of a condition allows termination and damages; breach of a warranty generally yields damages only. Drafting should label critical obligations as conditions.

Key idea: Courts look for clear obligations, objective performance criteria, and evidence that the failure was not excused (e.g., force majeure legitimately applied).

2) Remedies: choosing the right tool for the problem

2.1 Damages (money compensation)

• Expectation (benefit of the bargain): puts you where you would have been if the contract was performed (lost profit, extra costs to cover, replacement purchase price).
• Reliance: reimburses wasted expenditure/investments made relying on the contract.
• Restitution: prevents unjust enrichment (quantum meruit for partial performance accepted).
• Liquidated damages (LDs): pre-agreed sums for delay or performance failure. Courts award reasonable compensation not exceeding the sum named; draft LDs as a genuine pre-estimate, tied to measurable KPIs.
• Foreseeability & mitigation: you recover losses that were within contemplation at contracting; you must mitigate (act reasonably to limit loss).

2.2 Specific performance & injunction

• Specific performance: court orders performance—common in unique goods, immovable property, IP/tech deliverables where damages are inadequate.
• Injunctions: to prevent breach (e.g., misuse of confidential information), enforce negative covenants (non-solicit, non-deal within reason), or preserve assets/status quo.

2.3 Rescission & declarations

• Rescission unwinds the bargain for vitiating factors (misrepresentation, undue influence, mistake), often with restitution of benefits.
• Declaratory relief clarifies rights/obligations (e.g., interpretation of a clause) to avoid escalation.

2.4 Costs, interest, and timelines

Courts/arbitral tribunals may award interest and costs. Act promptly—limitation for simple contract claims is typically three years from the cause of action (the clock and exceptions can be nuanced).

3) The Breach Map™ — six scenarios you’ll actually face

1. Late delivery in a supply chain

• Signal: Missed shipment windows; inventory stockouts; LC/TT mismatches.
• Response: Issue time-of-the-essence notice, activate LDs, procure cover from alternate supplier, track extra costs and customer penalties.
• Prevention: Buffer clauses (safety stocks), Incoterms + banking docs alignment, progress reports, and escalation triggers.

1. SaaS uptime failure

• Signal: SLA dashboards flaring red; customer churn risk.
• Response: Trigger service credits; demand root-cause analysis and corrective action; consider step-in if critical.
• Prevention: Tiered SLAs, BCP/DR playbooks, incident timelines, independent audits.

1. EPC performance shortfall

• Signal: Failed performance tests; capacity/output below spec.
• Response: Conduct expert testing, claim performance LDs, draw performance securities/PGs, consider cure plan vs termination.
• Prevention: Tight testing protocols, interface risk matrices, and robust security packages.

1. Distribution channel non-compliance

• Signal: Grey-market leak, brand misuse, bribery red flags.
• Response: Audit rights; cease-and-desist; suspend shipments; terminate for compliance breach.
• Prevention: Anti-bribery & sanctions clauses, brand manuals, sell-out data audits.

1. JV/shareholders’ deadlock

• Signal: Reserved matters stalled; capex held hostage.
• Response: Invoke deadlock resolution (chair’s casting vote, buy-sell, third-party sale); injunctive relief for asset protection.
• Prevention: Clear deadlock ladder, put/call options, exit waterfall.

1. Data breach & confidentiality leak

• Signal: Unauthorized access; leaked designs.
• Response: Immediate injunction, forensic preservation, notify counterparties/regulators as required, claim IP/contractual damages.
• Prevention: Security baseline annex, audit rights, third-party risk management, incident simulations.

4) Force majeure vs. frustration: don’t mix them up

• Force majeure (FM) is contractual: if drafted, it excuses performance for specified supervening events (epidemics, government restrictions, war, export bans, large-scale cyber incidents). Parties must notify, mitigate, and resume as soon as possible. Payment obligations are usually not excused unless stated.
• Frustration is doctrinal (outside the contract): a rare, narrow escape where an unforeseeable event destroys the foundation of the bargain (e.g., illegality). Courts use it sparingly—don’t rely on frustration when you could have drafted a proper FM clause.

5) Indemnities, caps, and exclusions: the architecture of risk

• Indemnities:
• Third-party IP infringement (common in tech/content).
• Death/personal injury and property damage caused by negligence.
• Regulatory fines (negotiated cautiously).
• Procedures: prompt notice, control of defence, cooperation, no admission of liability.
• Liability caps: Aggregate caps (e.g., 12–24 months’ fees) with carve-outs (fraud, gross negligence, IP infringement, confidentiality breach).
• Exclusions: Lost profits, indirect/consequential loss—define carefully; remember foreseeability rules still apply.
• No exclusion for fraud: Clauses attempting to exclude liability for fraud are unenforceable.

6) Evidence wins cases: build your “war-room” file

When breach looms, documents decide outcomes. Assemble:

• The contract spine: fully signed agreement, SOWs/specs, annexes, change orders, amendments, side letters.
• Performance trail: QA reports, acceptance certificates, delivery notes, inspection logs, uptime dashboards, incident reports.
• Communications: formal notices, emails, meeting minutes, escalation memos.
• Financials: invoices, payments, credit notes, replacement purchase orders, customer penalty evidence.
• Compliance pack: stamping/registration proof, board approvals/DoAs, security instruments (PGs/APGs).
• Data for quantum: pricing sheets, market cover quotes, expert reports.

Pro tip: maintain a contract repository with version control and a live obligations tracker. It halves the time to draft a winning brief or settlement memo.

7) Breach response, step-by-step (with templates)

7.1 The first 7 days

1. Stabilise operations (cover orders, workaround, freeze changes).
2. Read the contract: cure periods, notice mechanics, LDs, step-in, termination pre-conditions, dispute ladder.
3. Issue a cure notice (sample skeleton):

• Identify clause(s) breached and facts.
• Demand remedy within X days per contract.
• Reserve all rights, including LDs and termination.
• Specify authorized address/email, in required format.

1. Evidence lock-down: preserve logs, devices, repositories; instruct teams not to delete or “improve” records.
2. Stakeholder map: inform your board, key customers, lenders (per covenants), and insurers where applicable.

7.2 Days 8–30

• Cure-plan negotiations with dated milestones; secure interim securities or escrow if risk is high.
• Parallel quantification: track recoverable loss, mitigation steps, projections.
• Without prejudice talks while preparing arbitration/court papers in case of failure.
• Consider interim relief (injunctions) if assets/IP/data at risk.

7.3 Days 31–90

• Escalate per the dispute clause: mediation → arbitration/court.
• File claims within limitation and contract timelines.
• Settle or proceed: if settling, document mutual releases, payment schedules, warranties of no further claims, and confidentiality.

8) Drafting to avoid breach drama (future-proof your contracts)

• Time & quality as conditions where mission-critical.
• Acceptance tests and defect windows with measurable KPIs.
• LDs pegged to realistic impact; service credits in SaaS with step-in triggers.
• Change-control discipline to prevent scope creep.
• Compliance clauses (anti-bribery, competition, sanctions, data/security) with audit rights.
• Arbitration-first clauses with clear seat/rules; interim relief carve-out for courts.
• Stamping/registration calendars baked into closing checklists.
• Insurance alignment (product liability, cyber, professional indemnity) with waiver/subrogation language.

9) Cross-border breaches: make your rights travel

• Choice of law & forum: honoured unless contrary to mandatory local policy. Pair Bangladesh law with international arbitration seated in a neutral venue for high-value cross-border deals.
• Foreign awards: Bangladesh is a New York Convention jurisdiction—foreign arbitral awards are generally enforceable, subject to limited defences.
• Sovereign counterparties: seek waiver of immunity (jurisdiction + enforcement).
• FX & tax: ensure damages/settlement payments can be remitted—coordinate with AD banks, tax gross-ups or netting provisions.

10) Sector spotlights (how breach plays out differently)

• EPC/Infrastructure: performance testing, LDs, and security packages dominate; expert evidence is decisive.
• TMT/SaaS: uptime, data incidents, and IP indemnities; logs and security annexes decide liability.
• FMCG/Manufacturing: specifications/QA and recall costs; Incoterms vs. banking docs alignment.
• Finance/Outsourcing: regulatory obligations and audit rights; termination assistance and data return are key.
• Real estate/hospitality: possession delays, operating-standard failures, and stamping/registration defects.

11) TRW’s breach toolbox (what you actually get)

• War-room pack: issues list, breach notice templates, evidence checklist, and a 30/60/90-day action plan.
• Quantum model: loss/mitigation calculator; LD reasonableness paper; expert engagement brief.
• Arbitration/litigation: pleadings, witness and expert management, injunction strategy, and settlement frameworks.
• Remediation & re-template: contract fixes, playbooks, training for sales/procurement/tech, and governance dashboards.

12) FAQs — straight answers for busy executives

Q1. Can we terminate immediately?
Only if the breach is material or the contract allows it (e.g., time-of-the-essence clause or specified “for cause” triggers). Otherwise, give the contractual cure period.

Q2. We named a hefty LD—will we get all of it?
Courts award reasonable compensation not exceeding the LD; link LDs to genuine estimates and keep evidence of expected loss.

Q3. The other side says “force majeure.” What now?
Check the FM clause scope, notice requirements, mitigation duties, and duration. Many payment obligations remain; prolonged FM may trigger termination for extended FM.

Q4. They’re hinting they won’t perform next month—can we sue now?
Clear anticipatory breach lets you accept repudiation and sue immediately, or affirm the contract and insist on performance (choose carefully; conduct matters).

Q5. Will our limitation clock pause during negotiations?
Not automatically. Consider standstill agreements while exploring settlement.

Q6. Can we recover “consequential loss”?
Depends on drafting and foreseeability. Many contracts exclude consequential/indirect losses; even without an exclusion, recovery hinges on what was contemplated when contracting.

13) A 90-Day TRW Breach-Readiness Program

Days 1–15 — Diagnose & Fortify
🟩 Audit top 20 contracts for conditions, LDs, caps, FM, and dispute ladder.
🟩 Build notice & evidence playbooks; configure e-signature + repository.
🟩 Train teams on cure notices, mitigation, and without-prejudice etiquette.

Days 16–45 — Simulate & Systemise
🟩 Run tabletop exercises (late delivery, SLA outage, data leak).
🟩 Pre-engage experts for EPC testing/SaaS forensics.
🟩 Approve arbitration playbook (seat/rules/panels) and injunction protocols.

Days 46–90 — Monitor & Improve
🟩 Quarterly board dashboard (claims, LDs, settlements, injunctions).
🟩 Re-template high-risk contracts; align insurance and covenants.
🟩 Close gaps in stamping/registration calendars and authority matrices.

14) Breach of Contract — TRW Summary Table

Speak with TRW’s Disputes, Arbitration & Contracts Team

Phones: +8801708000660 • +8801847220062 • +8801708080817
Emails: info@trfirm.com • info@trwbd.com • info@tahmidur.com
Global Law Firm Locations: Dhaka — House 410, Road 29, Mohakhali DOHS • Dubai — Rolex Building, L-12 Sheikh Zayed Road.

Want this turned into a custom breach playbook for your industry—with notice templates, evidence checklists, an LD calculator, and an arbitration quick-start kit? We can tailor and ship a board-ready version for your team.