Contract Law Flashcards
What happens when a warranty is breached?
A claim can be made for damages, the contract cannot be terminated.
What is an anticipatory breach?
Where one party, before time for performance has arrived, indicates that they will not be able to perform the contract as agreed. The innocent party is permitted to terminate the contract.
Compensation, explain it.
Should put the party who suffers back in the position they would have been in should the contract have been performed as intended.
Is any profit that the company would have expected to make included in their compensation.
Yes.
What is the “but for” test in compensation.
“but for” the breach, the loss would not have occurred.
What is claimant mitigation with respect to contract law?
A claimant is under obligation to mitigate his losses due to contract breach.
What is a liquidated damages clause?
A genuine attempt to quantify loss that will result from breach and will therefore be enforceable.
What is a penalty clause?
It’s not a genuine estimate - it intends to compel performance by imposing a penalty for non-performance. They are generally unenforceable beyond the value of the loss incurred.
What is a contract frustration?
Where a contract is not completed due to some occurrence or situation which is brought about through no fault of their own. For example, you rent a hall but lightening strikes and it burns down. This would result in a contract frustration.
What is force majeure?
Two parties allocate the risk of potentially frustrating a contract between them.
What are the consequences of frustration?
- Money payable in advance is recoverable
- Money due but not yet paid is not payable
Define tort.
A wrongful act or an infringement of a right (other than under contract) leading to legal liability.
Define duress.
Where a person enters into contract as a result of violence or the threat of violence. The party has not entered the contract by his own free will and counters the notion of freedom of contract.
Can duress cover threats to property?
Yes, in the most serious circumstances.
What happens in the doctrine of Undue Influence?
A relationship between two parties has been exploited by one party in order to gain an unfair advantage.
What are the remedies for improper conduct?
Rescission meaning the innocent party may choose to terminate the contract if he/she wishes. Damages are available either in addition or in lieu of rescission expect for cases of innocent misrepresentation.
What happens in arbitration?
Parties may decide to state in the contract what happens when things go wrong. Parties agree to submit themselves to an independent expert.
What are the advantages of arbitration?
- Arbitrator is an expert
- Opt out of state system (speed, control and privacy)
- Informal (maintains cross party relationships)
- Usually cheaper but still expensive as the arbitrator is an expert.
