EFFECTS OF CONTRACT BREACH

Question 1

How Can a Contract Be Breached - 6 Reasons

Answer 1

1. By clearly expressing verbally
   -“I will not perform this contract”
2. Self-induced frustration
   -One party makes it impossible to do what they promised, either intentionally or by being careless
3. Failure to Perform
   -A party either partially or totally fails to fulfill their obligations
   Substantial Performance
   - Even if a party didn’t do everything perfectly, if they did most of it correctly and the mistakes were minor, they can still enforce the contract.
4. Condition
   -A major or essential term of a contract is broken, then the innocent party can cancel the contract and stop performing.
5. Warranty
   If a minor and less important term of a contract is broken, the contract still stands, but the innocent party can claim damages (money compensation)
6. Representation
   Not a contract term, but if it turns out to be false (a misrepresentation), the innocent party may still:
   Get rescission (cancel the contract), and
   Be returned to their original position as if the contract never happened.

Question 2

So If You Are The Innocent Party… If a CONDITION is breached, you have option to:

Answer 2

1. Rescind/Terminate Contract
   Rescind or terminate the contract immediately, you want out of the contract and possibly compensation for what you lost
2. Keep Contract
   Can keep contract alive and continue performing obligations and sue other party for damages once you have finished all your obligations
   “Tender Performance for Clean Hands” → If you want to sue someone for breaking the contract, you must have fulfilled your own part (or at least tried to).
3. Sue for Equitable Remedy
   Keeping the contract alive still and suing for something called “Equitable Remedy”
   Equitable remedies are non-monetary solutions that a court can order when simply paying money isn’t enough to fix the situation.

Question 3

So If You Are The Innocent Party… If a CONDITION is breached, you may NOT rescind if:

Answer 3

1. condition is breached in very minor way
2. delay invoking your legal right to rescind the contract
3. accept a benefit under the contract or generally give the impression you wish to keep contract alive

Question 4

So If You Are The Innocent Party… If a WARRANTY is breached:

Answer 4

1. You essentially have no viable options to seek an immediate remedy
2. You must perform your obligations under the contract fully and you may then attempt to sue the breaching party for damages