Breach of contract

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Contract Law

This is a failure by one party to abide by the terms of a Contract, without lawful excuse (e.g., see: Frustration of contract). A breach may be:

  • implicit, in that a party simply does not honour his obligation, or
  • explicit, where the party in breach announces his intention not to be bound (repudiation, or anticipatory breach), or
  • by disablement, where one party acts in such a way as to make performance impossible.

If breach is anticipatory, the injured party may seek legal remedies immediately, even if there was originally a time limit on the contract. Moreover, if one party repudiates, the other may demand performance and continue to fulfil his own obligations. He does not have to treat the contract as discharged (indeed, he may not be able to).

If a contracting party believes that the contract has been breached, then various options are open to him:

  • he may continue to fulfil his obligations, then claim Damages against the party in breach (see: Remedies for breach of contract), or
  • he may repudiate the contract, and treat it as discharged. He may then attempt to claim damages from the party in breach. However, the other party may believe that his own actions did not constitute a breach, in which case the repudiation may be a breach of contract itself. It follows that repudiation is only a good idea if the breach has been substantial.

In no case does a breach of contract, however fundamental, automatically discharge the contract, nor does it necessarily declare it void. This means, in particular, that an Exclusion clause that is to the benefit of the party in breach may still apply.