Breach of contract

Question 1

Whats the definition of breach of contract?

Answer 1

Breach of contract is when one of the parties fails to do something they should have done under the contract. In this case the other can be sued for breach.

Question 2

What are the two forms of breach?

Answer 2

1. Actual breach- when the breach has happened, this includes breach of a condition or a breach of an ordinary term.
2. Anticipatory breach is when you can see that a breach is going to happen in the future but has not yet happened.

All types of breach will allow them to sue for damages but not all types will allow for reputation.

Question 3

If there has been an actual breach of a condition, what options does the victim have?

Answer 3

If the breach is sufficiently serious then the victim of the breach can:

1. Continue with the contract and sue for damages.
2. Repudiate (withdraw) from the contract.
3. Repudiate and sue for damages.

Question 4

If the victim chooses to repudiate what do they have to ensure?

Answer 4

• Must make sure the breached term is actually a condition and is a central term of the contract.
• That the breach is serious enough to give the right to repudiate.

Question 5

What was illustrated in Rice V Great Yarmouth BC?

Answer 5

• Clause in the contract said that if any obligation under the contract was breached, the council could end the contract.
• Tried to terminate the contract for the breach of minor clause.
• Gave unacceptable right to repudiate for breach of any term. Could only be for serious breach of a central term.

Question 6

What happens if there has been a breach of an ordinary term?

Answer 6

Breach of a warranty = only sue for damages

Breach of innominate term = only sue for damages

Question 7

Differences between conditions, warranties and innominate terms?

Answer 7

Conditions- Major term to the contract if breached can repudiate and sue (Passard V Spiers and Pond)

Warranty- A minor term in the contract, breach will not end the contract can only sue for damages (Bettini V Gye)

Innominate term- Can be a condition or warranty, only discover importance when breached (Hong Kong V Kawasaki)

Still be warranty even if the contract states its a condition ( Schuler V Wickman Tools)

Question 8

What is anticipatory breach?

Answer 8

Occurs when one party knows that the contract is going to be breached in the future, they have two options in this situation:

1. End it immediately and sue for breach
   Hochester V De La Tour- can sue immediately and do not have to wait for breach.
2. Continue with the contract and wait for the breach to sue.
   Dangerous strategy as will lose money if something occurs between finding out and the breach.