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Introduction:
A contract is an agreement between two or more parties which is enforceable by law. In a contract the party who is offering something to the other parties is known as offeror. And the party to whom the offer is made called an offeree. The offeror offers something to the offeree, and the offer may be either expressed or implied. If the offeree accepts the offer then it becomes a promise. After a promise has been made, then it is known as a contract. The concept of breach comes from the concept of contract. After a promise has been made, if any of the parties fails to enforce the contract or break the contract then it is known as breach of contract. Breach of contract is a legal cause of action in which a binding agreement or bargainedfor exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance. If the party does not fulfill his contractual promise, or has given information to the other party that he will not perform his duty as mentioned in the contract or if by his action and conduct he seems to be unable to perform the contract, he is said to breach the contract. If breach is present in a contract, then there must be a party who is harmed by the contract. In this case, the affected party will get some remedy. These remedies of breach are also judgmental and depend on the decision of the authority who is handling the case. In this report, various types of damages and its remedies caused by breach have been discussed and an overview of the breach has been explained.
1.1.
Research study or report writing is an effective way of practical learning. It plays a very crucial role on the academic study of the students. This is very much popular all around the world because of its relative importance. The primary objective of the report is to fulfill the requirement of our academic course BUS361 Business Law. As a requirement for the completion of the course we are doing this study as the topic assigned by our course instructor. This report has assigned to gather some practical knowledge about the subject matter and to get involve in different matters related to this course and for this reason this is also a primary objective of the study. There are some other objectives for doing this study. Those are the secondary objectives of the study. Those are: To define and explain the breach of a contract according to the Contract Act, 1872. To identify the possible damages that can be occurred by the breach of a contract. To identify possible remedies for those damages, especially with some practical case examples. To give some suggestions about the possible remedies for breach of a contract
These are some objectives of our study. And based on these objectives, we have prepared our study, by doing proper analysis on the subject matter. Page 1 of 12
1.2.
We didnt use any primary evidences while preparing this report. All of the evidences we have used in this report is from different secondary sources. The sources from which we have collected data are given below: Indian Contract Act, 1872 Articles published on the topic from different journals Real life cases and decisions collected from internet Internet based information from different websites
Based on these sources of information we have prepared this report. At first, we have studied those sources thoroughly and after that we have developed a framework for preparing the report. Then, according to the framework we have gathered information about different topics and put that information in the right place of that framework. This report is a combination of our group efforts and compiles information from different sources, which were essential for preparation of the report. Through proper management of the gathered information we have prepared and finalized this report.
1.3.
We have limited our study within the bracket of breach of a contract and its possible remedies from the overall Contract Act, 1872. Throughout this report we have highlighted and discussed only about the different aspects of breach of a contract. None of the other information from the Contract Act, 1872 has been discussed in this report. Some other limitations of the study are given below: Privacy of Information: These are the information about much classified topic. So, the information was not readily available. The information used in the study is not that much in-depth about the topic. Task Complication: We had financial limitations in the study. So surveying people from who are related to this sector was not possible as, this is very hard for us to reach them and survey them is also very much complicated task. Time Limitations: We also didnt have that much time to prepare this report in a very much well manner. Because, proper study on these types of study is very much time consuming.
These are some limitations we have faced while conducting this study.
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1.4.
Literature Review:
As in the literature review we disclosing that the paper which we had made for our course requirement is fully unique. We had work a lot and review many journals, articles, report, and case study and study a lot about the topic which we had is only to make the paper unique than others. We tried to provide the accurate information and other justification to make the paper different from others We have searched many websites in internet to find the relevant issue regarding breach of contract and the possible remedies. We have seen many national and international cases regarding the breach and we are putting some reference of it to make it visible and understandable to our honorable instructor. Some article references related to breach are: Meteorologist fired over breach of unwritten social media policy: written by Matt Wilson. A broadcaster at a news station in Louisiana politely responded to a Facebook comment about her hair. She lost her job over it, via a policy that wasn't codified. Dealing with information privacy breaches: keep calm and carry on: written by Caroline bush and Wi-loon-Chang Mammoth Lakes files for bankruptcy over $43-million judgment: published on July 2, 2012 | By Louis Sahagun, Los Angeles Times
These are some cases related to breach of a contract that we have studied and we guarantee that this report is not alike with any articles that has already made by someone else previously. References of some journals are also given below, with which our work can be compared. Some article references are given below: The Design of Contracts and Remedies for Breach, and the article is written by Steven Shavell. Damages for Breach of Contract: Compensation, Restitution and Vindication, and this article is written by David Pearce and Roger Halson.
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2.
Breach of a Contract:
A breach of contract can be any kind of non-performance or abstinence from completion of contract or non-fulfillment or only partial fulfillment. A breach can also involve a situation where a contract's performance is not up to the mark. Another case that is breached is nonpayment appropriate consideration. A time constraint is also remarked to be a non fulfillment of a contract.
2.1.
There are different types of breach of a contract exist. In the following diagram, we have shown different types of breach of a contract.
Breach of Contract
Fundamental
Term
Clauses
Condition
Anticipatory
Exclusion
Inclusion
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2.1.1.
Fundamental Breach:
A fundamental breach of a contract, sometimes known as a repudiatory breach, is a breach so fundamental that it permits the distressed party to terminate performance of the contract, in addition to entitling that party to sue for damages. In this case, the subject matter of the contract changes. There is a fundamental breach of a contract where the breach goes to the very core and essence of the contract. For example, if anyone contracted someone to build a house but the other party didnt, that would quite clearly go to the core and essence of the contract.
2.1.2.
Term Breach:
In this case, the performance of the contract occurs; the subject matter also remains the same still the breach may occur because, the term of the contract may distract from the original term of the contract. For example, if the contractor used fittings in some part of the house that are not the same as those agreed on in the contract, this breach might only be treated as a breach of a particular term, rather than a fundamental breach of the contract. Then, it will be considered as term breach as the term of the contract was not fulfilled.
2.1.3.
Clause Breach:
Sometimes additional clauses might be added to the contract which may breach the contract. These types of breach are called the clause breach of a contract. These clause breaches are also two types. Those are:
a) Exclusion:
Here, a clause may be added without any kind of bargaining. In this case, any of the contracting parties may add clauses to the contract and may tell the other party to consider the clause. This is the exclusion clause of breach of a contract. For example: in case of transportation of goods, if the route mentioned in the contract is closed or unavailable, then the other party may send the good from a different route by his own judgment, even though it was not in the contract to use a different route.
b) Inclusion:
In this case, a bargaining between the contracting parties is available about the clauses to be added in the contract. For example: in the contract from the previous example, there was a clause agreed by both of the parties of the contract to follow a different route if the original route is unavailable.
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2.1.4.
Condition Breach:
In this situation, the condition of the contract might be changed. A specific condition of the contract might be modified in some cases to perform the contract otherwise the contract could not be possible to perform. For example: a supplier was supposed to place a good in the morning of a particular day. But, because of strike he sent the good in the night of the previous date by another person otherwise the good may not be delivered on time. This type of breach of contract is called the conditional breach.
2.1.5.
Anticipatory Breach:
In contract law, anticipatory breach occurs when a party repudiates prior to the date that the performance is due. Anticipatory breach is an excuse for non-performance by the non-breaching party. A party can retract its anticipatory breach provided that the non-breaching party has not relied on it. When a party to a contract declares that he or she will not be performing his or her contractual obligations, either by word (for example, "I won't deliver the rest of the goods") or by action (for example, not showing up with goods or stopping payment). The result is that the other party to the contract is excused from having to complete his or her obligations under the agreement. Anticipatory breach is often a defense to a lawsuit for payment or performance on a contract. One cannot repudiate one's obligations and demand that the other person perform.
2.2.
There are some other types of breach of contract exists. Those are.
2.2.1.
Minor Breach:
A minor or partial breach is when the non-breaching party of the contract is not entitled to an order for performance of its obligations but only to collect the damages for which they are owed. For instance, if a homeowner hires a contractor to install new windows in a home and asks for wind resistant windows but the contractor uses windows that arent wind resistant the homeowner will ask the contractor for damages incurred. Since there is no difference in value between the two windows, the homeowner will not be awarded any damages. If there was a difference between the two windows then the homeowner would have been awarded damages that amount to the difference between the two windows.
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2.2.2.Material Breach:
A material breach is when there is a failure to perform a part of a contract that permits the other party of the contract to ask for damages because of the breach that has occurred. For example, if the contractor mentioned above uses windows that arent wind resistant and the windows break, the homeowner can collect damages for replacing the windows with the wind resistant ones. The following, as defined by the Restatement of Contracts, must be present to determine whether or not a material breach has occurred: The extent to which the injured party will be deprived of the benefit which he reasonably expected The extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived The extent to which the party failing to perform or to offer to perform will suffer forfeiture The likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances The extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing
These are the different types of breach. Till now in this chapter we have discussed about the types of breaches with proper examples. In the following chapter we have shown the remedies for these breaches of contracts.
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3.
If a dispute does occur due to breach of contract then the judge will need to decide that a legally binding contract does exist and that it has been breached. In some cases the contract may only be a verbal contract and there may be no actual written evidence that a contract was formed. In such cases a judge will need to go over the terms and conditions of the contract and clarify what actually took place in practice. Entitlement to damages may be awarded if the innocent party can prove that a breach of contract took place. The innocent party must prove that there was a loss due to the breach and that the nature of the loss would lead to compensation. Remoteness of loss will also be taken into consideration by the courts and may include future loss that could reasonably occur from the contract being broken.
Types of Remedies:
Two basic types of remedies are offered for the breach of a contract. Those are: a. Common Law Remedies b. Equitable Remedies These two types are described below:
3.1.
a) Unliquidated Damage:
Unliquidated damages refer to damages in a breach of contract case that were not predetermined by the party. The concept of unliquidated damages appears in the law in both torts and contract law. It can refer to any damages award a court awards in a breach of contract case. It can also refer to damages in a tort case that are left to the discretion of the judge or jury, such as damages for pain and suffering. These damages are given based on: Page 8 of 12
What can the claimant recover? How much the claimant can recover? Why the contract is breached? (Evaluating the causation)
b) Liquidated Damages:
These damages are specifically mentioned in the contract. These are available when damages may be hard to foresee and must be a fair estimate of what damages might be in case of breach. Provisions for liquidated damages frequently appear in all sorts of commercial contracts, both in individually negotiated contracts and in standard terms of business. They are commonly found in contracts for construction, engineering and supply or sale of goods. If a contract contains a liquidated damages clause: Parties must merely show that the relevant breach has occurred Parties does not have to prove actual loss The amount recoverable is not left for the court to decide The agreed figure should be a genuine pre-estimate of the loss likely to be caused by the specified breach.
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3.2.
In the section below, different types of equitable remedies have been discussed. Those are:
a) Preliminary Injunctions:
A preliminary or temporary injunction is a provisional remedy that is invoked to preserve the subject matter in its existing condition. Its purpose is to prevent dis-solution of the plaintiff's rights. The main reason for use of a preliminary injunction is the need for immediate relief.
b) Preventive Injunctions:
An injunction directing an individual to refrain from doing an act is preventive, prohibitive, prohibitory, or negative. This type of injunction prevents a threatened injury, preserves the status quo, or restrains the continued commission of an ongoing wrong, but it cannot be used to redress a consummated wrong or to undo that which has already been done.
c) Mandatory Injunctions:
Although the court is vested with wide discretion to fashion injunctive relief, it is also restricted to restraint of a contemplated or threatened action. It also might compel Specific Performance of an act. In such a case, it issues a mandatory injunction, commanding the performance of a positive act. Because mandatory injunctions are harsh, courts do not favor them, and they rarely grant them. Such injunctions have been issued to compel the removal of buildings or other structures wrongfully placed upon the land of another.
d) Permanent Injunctions:
A permanent or perpetual injunction is one that is granted by the judgment that ultimately disposes of the injunction suit, ordered at the time of final judgment. This type of injunction must be final relief. Permanent injunctions are perpetual, provided that the conditions that produced them remain permanent. They have been granted to prevent blasting upon neighboring premises, to enjoin the dumping of earth or other material upon land, and to prevent pollution of a water supply.
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These are different types of equitable remedies that can be given for the breach of a contract.
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4.
4.1.
Some suggestions about this topic from our group would be: The remedies should be awarded based on the actual loss a party occurs. The situations related to the breach should be thoroughly reviewed because; sometimes situation changes the intention of performing anything. If the matter of dispute is simple, then parties may involve in alternative dispute resonance. The performance of the parties also should be considered in the overall contract or in other words whether the breach is intentional or not. The remedy should be based on this thing. These are some recommendations about the remedies for breach of a contract that we would like to give.
4.2.
Conclusion:
Breaking the conditions of an agreement that is enforceable by law is known as the breach of contract. When breach of a contract occurs, in most of the cases at least one of the contracting parties gets affected with it. To recover the loss of that party, some remedies are awarded by the court if they can provide proper evidence. So, as there is existence of breach, anti breach activities called remedies for those breach is also there. This is totally based on the judgment of the court about the remedies or compensation that a party can get who is affected by the breach of contract. So, we can expect a proper law in the country which will provide such remedies or compensation for the breach so that the rate of breach of contract will be reduced by a significant number.
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