Contract law breach of contract

What is a breach of contract?

This is when one party fails to perform their obligations as per the terms of the contract. This results in the discharging of the other party's obligations under the contract.

Anticipatory breach or repudiatory breach

This occurs when one party indicates, either through words or actions, that they will not be performing their contractual obligations before the time for performance has arrived.

Express repudiation -- party explicitly states that they do not intend to perform their obligations

Implied repudiation -- one party takes actions that clearly demonstrate their intention not to perform

What options does a non-breaching party have when there is a anticipatory breach?

1) acceptance

2) affirm it - insist on performance

Acceptance of anticipatory breach

treat the contract as discharged and can therefore sue for damages immediately

Affirmation upon an anticipatory breach

Continue to insist on performance and wait until the time for performance to pass before claiming damages and treating the contract as discharged.

What is an actual breach?

This is when a party fails to perform their contractual obligations at the time specified in the contract.

E.g. agreed upon work, providing a service or product, not delivering goods on time or at all, and failing to make payment as agreed.

What happens when an actual breach occurs?

The non-breaching party can treat the contract as discharged and claim damages for the breach.

Can a non-breaching party terminate the contract?

Yes. Termination depends on the injuries party. The injured party can be released from his obligation to perform because of the other party's defective or non- performance.

If the injured party fails to exercise his option to terminate, or positively affirms the contract, the contract remains in force and each party is bound to perform his obligations when that performance falls due.

How do you terminate a contract?

Must unequivocally indicate intention to terminate by giving notice to the breaching party or commencing proceedings. They must terminate the contract as a whole. The injured party must not accept further performance after the breach otherwise it would be viewed as affirmation and they cannot later terminate the contract.

What is the effect of termination?

After termination, the injured party is no longer bound to accept or pay for further performance