Breach Flashcards
What happens when a party fails to perform their obligations under a contract?
That party may be sued for breach of contract.
What are the two types of breach of contract?
ACTUAL and ANTICIPATORY.
What is an ACTUAL breach of contract?
It is when a party actually fails to perform their obligations under the contract.
What is a repudiatory breach of contract?
It is a breach which is so serious that it renders the contract useless and gives the innocent party the option to terminate.
Example case: Hong Kong Fir Shipping v Kawasaki.
What is a repudiatory breach?
A repudiatory breach can occur in three ways: a breach of condition, a refusal to perform the contract, or a serious breach of an innominate term that would be considered a breach of condition.
What can the non-breaching party do if a repudiatory breach is established?
The non-breaching party may terminate the contract and claim damages or continue the contract and claim damages.
What is the claim limitation for an actual breach of a warranty?
The claim is limited to damages.
What is an anticipatory breach?
An anticipatory breach occurs when a party to a contract gives advance notice that they will not be performing or completing the contract.
What options does the innocent party have in case of an anticipatory breach?
The innocent party can sue immediately, wait for the time agreed for performance and sue if performance does not occur, or perform the contract anyway and claim for the value of the remaining contract.
What happens if the innocent party decides to sue immediately for anticipatory breach?
They can sue for breach of a condition to put them in the same position they would have been in had the contract been performed, but they must mitigate the loss.
What is the risk of waiting to sue for anticipatory breach?
Damages are assessed at the time when performance should occur, and loss might increase due to changes in market factors.
What can the victim do under anticipatory breach?
The victim may repudiate (end) the contract and would no longer be bound to perform any obligations under the contract.
What is another way a contract may be discharged?
An event may occur which discharges the contract, such as frustration.
