15.

BREACH OF CONTRACT

Civil law:
each party holds an enforceable right to claim performance from the counterparty in case of
 Non performance
 Defective performance
 Delay in performance
German law : the creditor is entitled to claim performance from the debtor. ( that may consist
in forebearance= tollerance)
Code Napoleon : a credito of an obligation may seek performance unless performance is
impossible or there is a disproportion between its cost to debtor and its interest for the creditor

Common law :
Efficient breach of contract -> a party is allowed to break the contract signed and pay damages
( if it is more convenient than performing the contract itself )
Anticipatory breach of contract -> a party declares its intenton of not performing before the
performance is due
Actual breach of contract -> it occurs on due date or during the performance

Remedies
The promise is entitled with a set of remedies
When one party breaks a contract the other can ask a court to provide a remedy for the breach,
a remedy is a court order that seeks to uphold someone’s right or redress another’s illegal
action. They depends on the role that legal system assigns to contract law:
 Moral approach : promises must be fulfilled, pacta sunt servanda imposing the
fulfillment of the debtor’s duty as a remedy
 Economic approach : instead of performing, the debtor may prefer the other party to
the financial position which it would have had if the contract was properly performed (?)

1. Specific performance -> if a party does not perform it can be forced by a court of
law
2. Termination of contract -> the non-breaching party may ask for the dissolution of
the contract or claim the restitution of what is has already paid
3. Damages -> monetary reward to bring the party in the same financial situation if
the contract had been performed

Civil law
Specific performance is a general remedy
There are execptions : impossibility to perform, disporoportionate costs and contracts
involving personal services ( the performance would potentially contravene the debtor’s
personal freedom ex painting a portrait )
Common law
Compensation of damages is the general remedy
Specific performance is exceptional, in particular is available when damages are “inadequate”
like contracts concerning specifi goods.
No specifc performance for generic goods

Termination
The innocent party may be willing to repudiate instead the contract, if this remedy is allowed by
the law, no performance is due by either party and, in case performance already happened, it
shall be given back by recipient

Termination may also occur irrespectively of a breach in specific circumstances

1. Explicit dissolution case -> parties can agree the contract will be dissolved if a
specific obligation is not performed in a designated way. Parties attribute
fundamental importance to an obligation
2. Time essential for one party -> contract dissolves if one party does not respect the
time fixed for performance

Civil law
Termination is allowed when its breach is material
Breach of contract may lead to termination if it is fundamental
 If the exact performance is not carried out, the party may be in breach for damages, but
the innocent party will not be entitled to seek dissolution of the contract for non
performance.
Common law
(contract terms)
Conditions -> major terms of the contract, if breached the innocent party is entitled to
terminate the contract
Warranties -> minor terms of the contract, if breached the innocent party is entitled to claim
damages
Innominate / Intermediate terms -> not major or minor per se. Upon breach the innocent party
can only claim damages. Termination is only allowed if as effect of the breach, the party is
deprived of the whole benefit of the contract.