BUSINESS LAW (CHAP.16) - BREACH OF CONTRACT AND REMEDIES

Breach of contract

a contracting party's failure to perform an absolute duty owed under a contract

Complete performance

A situation in which a party to a contract renders performance exactly as required by the contract. Complete performance discharges that party's obligations under the contract.

executed contract

a contract that has been fully performed by both parties

Tender of Performance

An unconditional and absolute offer by a contracting party to perform his or her obligations under a contract.

Substantial Performance

performance by a contracting party that deviates only slightly from complete performance

Minor breach

A breach that occurs when a party renders substantial performance of his or her contractual duties.

Material breach

A breach that occurs when a party renders inferior performance of his or her contractual duties.

inferior performance

a situation in which a party fails to perform express or implied contractual obligations and impairs or destroys the essence of a contract

Type-of-performance

- Complete performance

- Substantial performance

-Inferior performance

Anticipatory Breach

A breach that occurs when one contracting party informs the other that he or she will not perform his or her contractual duties when due.

Monetary Damages

an award of money

Compensatory Damages

An award of money intended to compensate a nonbreaching party for the loss of the bargain. Compensatory damages place the nonbreaching party in the same position as if the contract had been fully performed by restoring the "benefit of the bargain."

Consequential Damages

Foreseeable damages that result from a party's breach of contract but are caused by special circumstances beyond the contract itself.

Nominal Damages

Damages awarded when the nonbreaching party sues the breaching party even though no financial loss has resulted from the breach. Nominal damages are usually $1 or some other small amount.

Mitigation damages

A nonbreaching party's legal duty to avoid or reduce damages caused by a breach of contract.

Linquidated damages

Damages that parties to a contract agree in advance should be paid if the contract is breached

Recission

An action to rescind (undo) a contract. Rescission is available if there has been a material breach of contract, fraud, duress, undue influence, or mistake.

Restitution

The return of goods or property received from the other party to rescind a contract.

Equitable Remedies

A remedy that is available if there has been a breach of contract that cannot be adequately compensated through a legal remedy or to prevent unjust enrichment.

Specific Performance

A remedy that orders the breaching party to perform the acts promised in the contract. Specific performance is usually awarded in cases in which the subject matter is unique, such as in contracts involving land, heirlooms, and paintings.

Reformation

An equitable doctrine that permits the court to rewrite a contract to express the parties' true intentions.

Arbitration

A form of ADR in which the parties choose an impartial third party to hear and decide the dispute.

binding arbitration

an agreement between the parties to a dispute whereby they agree that the decision and award of the arbitrator cannot be appealed to the courts

Arbitration Agreement

An agreement that requires disputes arising out of the contract to be submitted to arbitration

Intentional interference with contractual relations

A tort that arises when a third party induces a contracting party to breach the contract with another party