Chapter 33- Breach

Question 1

When is a contract said to be breached

Answer 1

• When one party performs differently from what was agreed, or not at all or they indicate in advance that they will not be performing as agreed

Question 2

What is an anticipatory breach

Answer 2

• When the party indicates in advance that they will not be performing the contract as agreed
• The effects are:
• The other party can sue straight away rather than wait for the breach
• They do not have to wait for the date of performance of the contract

Question 3

There are 3 main circumstances in which the innocent party may choose to discharge a contract:

Answer 3

• Repudiation
• Breach of contract
• Seriousness of the breach of an innominate term

Question 4

What is repudiation

Answer 4

This is where one party makes it clear that they no longer intend to be bound by the contract, either during its performance or before its due

Question 5

What occurs after a breach of a condition vs a warranty

Answer 5

• Where it is a breach of a condition, it allows the innocent party to terminate the contract
• Where it is a breach of a warranty, the innocent party cannot terminate the contract but can claim damages

Question 6

What is a serious breach of an innominate term

Answer 6

• If the breach is so serious as to undermine the foundation of the contract, the contract can be terminated

Question 7

Steps to discharging the contract

Answer 7

• The innocent party must first choose to treat the repudiation as bringing the contract to an end
• This decision will then be made known to the other party in an unequivocal manner
• Once this is made, the innocent party cannot go back on their decision.

Question 8

Define discharge by agreement

Answer 8

• When the parties both agree to terminate a contract, so that one or both parties can stop doing their contractual obligations

Question 9

Bilateral discharge vs Unilateral discharge

Answer 9

Bilateral: Where both parties receive a benefit from the discharge
Unilateral: Where only one party receives a benefit from the discharge

Question 10

What are the 3 types of bilateral discharge and define them

Answer 10

• Complete discharge: Intending to abandon completely the original contract
• Partial discharge: Intending to only modify the terms of their previous contract
• Fresh agreement: Intending to abandon completely the original contract but replace it with a new one

Question 11

Evaluate Breach

Answer 11

• Breach is able to clearly indicate when a contract has been broken
• Determining whether a term is a condition/ warrant or innominate term can be difficult.
• Deciding whether to accept the breach or wait for actual breach may place the innocent party at risk and in a legal grey area.