8. CLaw - Termination and Remedies for Breach.docx - Contract Law Termination of Contract Remedies for Breach of Contract Modes of Termination(1

8. CLaw - Termination and Remedies for Breach.docx -...

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Contract Law: Termination of Contract & Remedies for Breach of Contract For example, if X goes to a clinic, sees the doctor, pays for the medicine and leaves, the contract comes to an end. However, even if the contract is completed, if it turns out that there is some breach, the innocent party has the right to bring an action for breach of contract. Hence if the doctor prescribed the wrong medicine, X can bring a claim against the doctor for losses arising from breach of contract. If a party to the contract has not completely performed his obligations under the contract, he cannot seek any payment from the other party. Exceptions to the rule that payment is conditional upon complete performance: 1. Substantial performance Party performing may nonetheless be able to claim the contract price, less the cost of making good any omissions or defects in execution Whether there is substantial performance depends on facts of the case However, if the obligation under the contract is an entire one , even if there is substantial performance, it may not be possible to make a claim 2. Divisible contracts Certain contracts may be divisible into stages e.g. modern day employment and construction contracts, where after each stage is completed, the party performing would be entitled to progress payments 3. Prevented performance If one party has begun performing obligations but has been prevented by other party from continuing, the party who has performed part of the contract may nonetheless be entitled to payment on a quantum meruit basis – payment based on value of service rendered 4. Acceptance of partial performance If one party has not completely performed obligation and other party by words or actions, intimates that he accepts the incomplete performance , the party who has not completely performed the contract may nonetheless be able to claim on a quantum meruit basis However, there would be no acceptance if the other party to the contract has no choice but to accept the partial performance Modes of Termination: (1) Performance, (2) Agreement, (3) Repudiatory or Fundamental Breach, (4) Frustration PERFORMANCE AGREEMENT
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“Agreement” may be found in the original contract or might come about subsequently. Original contract can provide in the termination clause that: Contract would automatically come to an end after happening of a particular event Either or one party to the contract can terminate it any time by giving certain amount of notice without having to give reason. What is reasonable notice depends on facts of each case. E.g. employment contracts Parties may also subsequently agree to terminate the contract. Like making a new contract → all elements of a contract must be present If new agreement to terminate is not under seal or deed, there is a need for consideration .
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