Chapter 13- Breach of Contract and its Remedies.docx -...

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Chapter 13- Breach of Contract and its Remedies Implications of breach -> a breach arises where performance is incorrect, incomplete, performance is not in accordance with the contract, including a failure to perform at all -Breach of any term in a contract entitles non-breaching party to claim damages -the purpose of the contract must be defeated to that performance by the non-breaching party is rendered pointless -to discharge a contract, breach must undermine the whole contract, or a substantial part of the contract (only then is option to discharge contract is available) Type of Breach -severity of the breach matters (ex. delivered 95/100 contracted vs. delivering 0) - Major Breach: a breach of the whole contract or of an essential term of the contract so that they purpose of the contract is defeated - Minor Breach : a breach of a non-essential term of a contract or of an essential term in a minor respect -First task when breach occurs -> determine importance of breached term Essential vs. Non-essential terms Contract terms can be classified into two categories: -Condition = essential terms of a contract -Warrant = non-essential term in a contract -not always easy to distinguish -important as it determines what remedies are available How a breach may occur A party to a contract may break it by: 1. Expressly repudiating (rejecting) its obligations 2. Acting in a way that makes it impossible to perform its promises 3. Failing to perform at all or tendering an actual performance that falls short of its promise Express Repudiation: one of the contracting parties advises the other that it doesn’t intend to perform as promised -if the repudiation is of the whole contract, or a substantial part of it, non-repudiating party is entitled to treat contract at an end, find another party to perform and sue for damages it sustains -must inform that treating at and end and reserving right to sue for damages for breach Anticipating breach : an express repudiation that occurs before the time agreed for performance -> CHOICE: 1. Treat the contract immediately at an end and sue for losses 2. Insist on performance and sue when the time of the performance arrives, and no performance is received

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