BL-Chapter 16 - 1 CHAPTER 16 REMEDIES FOR BREACH OF...

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CHAPTER 16 REMEDIES FOR BREACH OF TRADITIONAL AND E-CONTRACTS Introduction Three Levels of Performances: 1. Complete 2. Substantial 3. Inferior - Breach of contract -occurs is a contracting party fails to perform an absolute duty owed under a contract -The most common remedy for a breach of contract is an award of monetary damages often called the “law remedy” - If it doesn’t provide enough relief equitable remedies, including specific performance, reformation, and injunction may be awarded -Equitable remedies are based on the concept of fairness Performance and Breach If a contractual duty (covenant) has not been discharged or excused, the contracting party owes an absolute duty to perform . Breach of contract occurs when a contracting party fails to perform an absolute duty owed under a contract. Types of Performance Complete Performance Also called strict performance Occurs when a party renders performance exactly as required 1
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Executed Contract- Contract that is fully performed Performing party discharged . Most contracts completely performed. Tender of performance also discharges contractual obligations. Tender -an unconditional and absolute offer by a contracting party to perform his obligations under the contract Substantial Performance: Minor Breach Occurs when there is a minor breach of contract/ when a party renders performance that deviates slightly from complete performance. The nonbreaching party may try to convince the other party to elevate complete their performance If the breaching party doesn’t correct the breach the nonbreaching party may recover damages by: 1. Deducting the cost to repair the defect from the contract price and remitting the balance to the breaching party 2. Suing the breaching party to recover the cost to repair the defect if the breaching party has already been paid Ex. Trump hires contractor to install two-ply windows but they install three-ply windows. If the contractor corrects the mistake then their performance is elevated from substantial to complete. But, if Trump has to hire someone else, he may deduct the cost of repair from the contract price and remit the difference to the contractor 2
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Inferior Performance: Material Breach Material breach of a contract occurs when a party renders inferior performance of his contractual obligations that impairs or destroys the essence of the contract There is no clear line between a minor breach and a material breach-case by case basis Nonbreaching party may rescind contract and seek restitution of any compensation paid Nonbreaching party excused from any further performance. Or, they can sue to enforce contract and seek damages Ex . A college contracts to have a building built that fits 300 students instead it was built and it only holds 200 because inferior material was used to build it. Since the defect can’t be repaired without rebuilding the whole building and this constitutes a material breach the college can rescind the contract and require removal of the building. The college is discharged of any obligations and is free to employ another contractor.
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BL-Chapter 16 - 1 CHAPTER 16 REMEDIES FOR BREACH OF...

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