Breach of contract
A breach of contract occurs when a party repudiates or fails to honor the set contractual obligations. A breach may also occur when an individual fails to perform the agreed upon obligations by the set time for its performance. In determining the damages recoverable from a contract breach, courts apply some basic principles. Accordingly, courts may direct that damages are paid in monetary terms rather than ordering specific performance from individuals. Judicial intervention is intended to indemnify the faulted party back to the position they would be in, if the contract had not been breached. The term guilty party refers to the person committing contract breach while the other party is called the aggrieved.
Judicial relief is intended to compensate the promise made and ensuring that the other party goes through with the provisions of the contractual agreement. McKendrick (2014) suggested that contract law is not designed to punish the breaching party but to provide relief to the party harmed by the repudiation of the contract. A court may impose punitive damages to deter certain types of behavior through monetary penalties. However, these are not recoverable by either party because they are intended to deter certain types of behavior in future. In some cases, a party can provide evidence of a contract breach but cannot prove there are damages with certainty. Here, nominal damages may be imposed by the court in recognition of the harm related to the breach.
While any breach of contract may lead to a cause of action, not every breach discharges the guilty party from liability. Courts tend to investigate the specific circumstances of the case in determining whether a specific party is relieved from future performance by the conduct of another (Suff, 2013). Therefore, when a provision of contract that is critical to the continued execution of a contact is broken, the breach destroys the basis of the contract. Courts seek to determine whether the conduct judicial conduct amounts to absolute negation to perform the contract which amounts to repudiatory breach.
In a case where a party expresses their intention not to fulfill his contractual obligation prior to the contractual performance, that party is deemed to have engaged in an anticipatory breach to the contract. A contract continues binding other parties and a breach is said to have been committed if the guilty party fails to perform his contractual obligation by the due date. According to McKendrick (2014), failure to perform the contract may lead the aggrieved to sue for appropriate damages, remedy or specific performance. The contract itself defines the obligations and rights for contracting parties which are enforced through remedies.
The available remedies for contractual breach include suit for: rescission, specific performance, damages, quantum meruit and injunction. Although a breach discharges the contract, one of the available remedies is that the aggrieved party could obtain a formal rescission from the court for the cancellation of the contract. This frees the party from his contractual obligations. Secondly, Jacobi and Weiss (2013) suggested that the aggrieved could sue for damages in the form of monetary compensation for the arising loss. In most cases, damage is the most sought after remedy on contract breach. In granting damages to the aggrieved, the court seeks to determine the magnitude of the loss or the inconvenience caused to the aggrieved party.
The suit for quantum meruit is another remedy available to the aggrieved party. The concept of quantum meruit suggests that the aggrieved should only be paid as much as they earned for contractual breach. When a party fulfills their part and the other party repudiates it, then the party who has done his part can claim remuneration for work done under quantum meruit. Cheeseman (2001) suggested that there is an exception to the above rule if the contract work is indivisible. Accordingly, the contract must not have provided for lump sum compensation for this remedy to apply.
Alternatively, the party not in breach can obtain a court order directing the guilty party to refrain from the acts leading to the breach of the contract. Injunction is also viewed as a way of obtaining specific performance of the unfulfilled provisions of the contract. Such a court order is a reprieve for the aggrieved party who gets remedy for the nonperformance. Finally, the aggrieved party may sue the noncompliant party for specific performance especially in cases where damages may not be adequate compemsation according to the set contractual provisions. Under the specific performance remedy, the court can direct the breaching party to expedite his promise according to the set contract terms (McKendrick, 2014). More specifically, suit for specific performance is ordered where there are no pre-existing standards for determining the actual loss incurred by the aggrieved party or where monetary compensation cannot be an adequate remedy.
In sum, this essay has established that there are various essentials in a contractual breach. The remedies available are intended to compensate the aggrieved party for loss that may have occurred as a result of the breach. In order to prove entitlement to the various remedies, the aggrieved party must prove to the court that the breach resulted in an actual loss that is entitled to compensation. Additionally, the discussion established that monetary damages may sometimes be considered an inadequate remedy. In this case, suit for injunction and specific performance are considered adequate remedies in common law.
Cheeseman, H. R. (2001). Business Law: Pearson New International Edition. Pearson Higher Ed.
Jacobi, O., & Weiss, A. (2013). The effect of time on default remedies for breach of contract. International Review of Law and Economics, 35, 13-25.
McKendrick, E. (2014). Contract law: text, cases, and materials. Oxford University Press (UK).
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Suff, M. (2013). Essential Contract Law. Routledge-Cavendish.