Termination of contract

Question 1

Key point

Answer 1

in order to decide whether this right exists it is necessary to consider the kind of term in the contract which has been breached

Question 2

If a condition has been breached

Answer 2

If a condition is broken the innocent party may be entitled to terminate the contract as well as sue for damages

Question 3

If an innominate term has been breached

Answer 3

Innominate = can’t be classed as condition or warranty. If an innominate term is broken the innocent party can only terminate the contract if the breach deprives him of the whole benefit of the contract

Question 4

Repudiatory breach definition

Answer 4

If a breach entitles a party to terminate

Question 5

Example of repudiatory breach

Answer 5

Time for payment is a condition if the buyer fails to pay on time the seller may terminate the contract

Question 6

Right of election of the innocent party

Answer 6

If a contract has been fully performed by both parties it will not usually be possible to terminate. Special rules apply to sale of goods contracts - if the seller breaches description, quality and fit for purpose CRA and description, quality and fit for purpose SGA the buyer may usually reject the goods.

Question 7

Effect of termination

Answer 7

If the innocent party terminates, the contract is at the end and future obligations will be discharged. Neither party will need to perform any future obligations under the contract. The innocent party can sue for damages for any loss suffered. Termination MUST be communicated

Question 8

Effect of affirmation

Answer 8

If the innocent party affirms it the contract is not over and both parties should continue to perform their obligations. Innocent party must make it clear they are continuing the contract. Can still claim damages for any loss suffered.

Question 9

Anticipatory breach

Answer 9

When a party gives advance warning that he is not going to perform his contractual obligations when they fall due. The innocent party can:
- Terminate the contract and claim for damages
- Treat the contract as continuing and wait until the time fixed for performance in the hope that the party in breach will change his mind

Question 10

Common law remedies

Answer 10

Damages, an action for the agreed sum and termination of future performance of contract.

Question 11

Equitable remedies

Answer 11

Specific performance and injunction. Discretionary

Question 12

Termination by performance

Answer 12

When the contract has not been properly performed