JAMIA MILLIA ISLAMIA
FACULTY OF LAW
B.A LLB (H) SELF-FINANCE
1st SEMESTER
ASSIGNMENT
TOPIC- BREACH OF CONTRACT
SUBMITTED BY- AAYAN AHMAD KHAN
STUDENT I`D- 202309022
SUBMITTED TO- VARSHA GULAYA MA'AM
Certificate
This is to clarify that AAYAN AHMAD KHAN
carried out the project work entitled
“Breach of Contract” in partial fulfilment of
the requirement for law of contract assignment
work under my guidance and supervision that
is completed to my satisfaction. The material in
this project is slightly original.
Table of Content
● Introduction
● Understanding of Contract
● Important component of contract
● Breach of Contract
● Types of Breach of contract
● Remedies for Breach of Contract
● Defense to Breach of Contract
● Case Studies on Breach of Contract
• Conclusion
● References
Introduction
We examine the complex area of contract breach in this assignment. We examine the
fundamental components of a contract, the various kinds of breaches that may occur, and the
ensuing legal ramifications and remedies. In addition, we look at the defenses open to parties
charged with violating contracts, and we offer actual case studies to give specific instances of
how breaches could occur.[1]
We examine the complex area of contract breach in this assignment. We examine the
fundamental components of a contract, the various kinds of breaches that may occur, and the
ensuing legal ramifications and remedies. In addition, we look at the defenses open to parties
charged with violating contracts, and we include actual case studies to give specific instances
of breach situations.
1. Introduction
Understanding Contract
A contract is simply a promise between two parties that can be legally enforced. There must be
an exchange of something of value by each party, such as money, goods, or services. A contract
can be as simple as buying a gallon of milk or as complex as selling a company.[2]
Important components of a contract are:
Offer: This is the first proposal that outlines what one side is prepared to supply or do.
Acceptance: The opposite party must accept the terms as stated after the offer is made.
Consideration: A valuable exchange must occur in order for a contract to be fulfilled. It
could be cash, products, services, or other assets.
Legal Capacity: Each party must be of sound mind and meet the age requirements in order
to have the legal capacity to enter into the contract.
Intention to Establish Legal Relations: In order for a contract to establish legal duties, both
parties must intend for it to do so. This is especially important when it comes to business and
law.
Breach of Contract
When one party violates the conditions of a contract between two or more parties, it is
considered a breach of contract. This covers situations where a contractual duty is not met at
all, like when a renter vacates their apartment and owes six months' worth of arrears, or when
it is not fulfilled on time, like when you are late with a rent payment.
Types of Breach of Contract
Material Breach:
This constitutes a material and grave breach of a basic provision or requirement of the
agreement. The non-breaching party may request remedies, such as damages and contract
termination, and is frequently released from further performance obligations..
Minor Breach (Partial Breach):
A minor breach is a smaller departure from the terms of the contract than a material breach.
The non-breaching party may pursue damages for any harm or loss brought about by the breach,
but they are not released from their own obligations.
2. Understanding of Contract
3. Anticipatory Breach:
When one party makes it obvious that they will not be fulfilling their contractual obligations
by the deadline, this is known as an anticipatory breach.
Without waiting for the actual breach, the non-breaching party may treat the contract as broken
right away and pursue remedies.
Fundamental Breach:
A serious material breach that effectively negates the contract's main goal is referred to as a
fundamental breach. Under such circumstances, the non-breaching party may be able to end
the agreement and pursue damages.
Actual Breach:
When one party does not carry out their contractual responsibilities as outlined in the agreement
and within the predetermined time frame, there has been an actual breach. This kind of breach
occurs when one party doesn't fulfill their obligations and isn't anticipated.
Repudiatory Breach:
A repudiatory breach, sometimes referred to as a repudiation, is a kind of anticipatory breach
in which one party expresses their intention to default on their end. The innocent party may
consider the agreement to be cancelled and pursue damages.
Nominal Breach:
A nominal breach is a small, technical violation of the terms of the contract that causes little
damage or loss. The amount of damages awarded is usually small, often just a symbolic sum..
Partial Breach:
When a contract is broken, only a portion of its obligations are affected, not the whole
agreement. This is known as a partial breach. For the particular portion of the contract was
broken, the innocent party may be entitled to compensation.[3]
Remedies for breach of contract
1. Compensatory Damages
Compensatory damages are the most common type of damages awarded in contract violation
cases. Their purpose is to put the non-breaching party back in the same situation that they
would have been in had the agreement been adhered to. For example, you will be entitled to
compensatory damages to cover the cost of hiring a different contractor to finish the job if the
contractor you hire to construct a new wing on your office building breaches the agreement
by not finishing the work.
3.Types of Breach of Contract
4.Remedies for a Breach of Contract
2. Liquidated Damages
Damages that are specifically specified in a contract in the event of a breach are known as
liquidated damages. They can be a set sum of money or a formula for determining damages,
and their goal is to give the non-breaching party a certain amount of compensation.
3. Rescission
A remedy called rescindation enables the non-breaching party to end the agreement and get
back to their pre-agreement status. Usually, this is only available in cases where the violation
is significant or fundamental to the agreement.
4. Specific Performance
One remedy that may be available in certain cases of contract breach is specific performance.
It is a court order compelling the party in violation to fulfill their end of the bargain. This
remedy is typically only available in cases where the contract's subject matter is unique and
compensatory damages are insufficient to compensate the non-breaching party..
5. Injunction
A court order known as an injunction compels the party in violation to either take a specified
action or abstain from taking a specific action. It is typically applied to cases of contract breach
in which one party still owes money to the other. Failure to fulfill the obligations could result
in irreversible harm to the other party.[4]
Defenses to Breach of Contract
When facing allegations of breach of contract, parties accused of failing to meet their
contractual obligations may present various defenses to challenge or mitigate their liability.
These defenses are crucial in shaping the outcome of contract disputes. Here are some key
defenses:
1. Impossibility of Performance:
-This defense argues that unforeseeable circumstances outside of the breaching party's control
rendered their performance impossible. Natural disasters, governmental actions, or
interference from the other party can all make something impossible.
2. Mutual Mistake:
-When both parties held false beliefs regarding a material fact covered by the contract,
mutual mistake is invoked. If the error affects the core of the agreement, it may make the
contract null and void.
5.Defenses to a Breach of Contract
3. Duress and Coercion:
-This defense argues that one party entered into the contract against their will. Examples of
duress include threats of violence, bodily harm, or undue coercion that impairs a party's
ability to enter into a contract.
4. Statute of Limitations:
-This Défense contends that the statute of limitations for pursuing a claim has expired. The
harmed party might not be able to seek remedies if this is the case.
5. Waiver and Release:
-The parties may release one another from further obligations or waive specific contract
provisions with one another's consent. If one party has given up their rights, it could be
challenging to later claim a breach of the agreement. When someone is accused of breaking a
contract, these defenses offer them the opportunity to deny the charges or reduce their
liability. The outcome of a breach of contract dispute often depends on the specifics and
strength of the defenses asserted.[5]
Case studies on breach of Contract
Certainly, there have been many famous cases of breach of contract over the years. Here are a
few notable examples:
1. Lucy v. Zehmer (1954):
-A man by the name of W.O. Lucy asserted in this case that he was under contract to buy a farm
from the Zehmer family. The Zehmers contended that they weren't serious and hadn't meant to
make a binding agreement. The court decided in Lucy's favor, concluding that there was a valid
contract, highlighting the significance of the parties' objective intent in contract law.
2. Hamer v. Sidway (1891):
-In this instance, William Story, the uncle, promised $5,000 to his nephew William Hamer in
exchange for him abstaining from alcohol, tobacco, and gambling until he turned 21.
-Hamer complied with the terms, but Story wouldn't give him the $5,000 when he asked for
it.
- The court decided in Hamer's favor, finding that the consideration—avoiding vices—was
adequate to establish a binding agreement.
3. Carlill v. Carbolic Smoke Ball Company (1893):
- This well-known case in contract law addressed the idea of unilateral contracts.
The Carbolic Smoke Ball Company offered a reward to anyone who used their product and
still became ill, along with claims that it could prevent influenza. The product was used as
instructed by Mrs. Carlill, who became ill; however, the company declined to reimburse her.
The court determined that there was a unilateral contract in place and that Mrs. Carlill was
qualified to receive the reward because she had fulfilled the terms of the offer.
4. McDonald's Corp. v. Steel (2002):
-In this instance, McDonald's filed a lawsuit against two former workers alleging that they
had violated a non-compete agreement. The workers had quit McDonald's and opened a
comparable company close by. The non-compete clause was upheld by the court's decision in
favor of McDonald's, highlighting the importance of non-compete clauses in employment
contracts.
5. J'Nan Ennis v. Thompson, Coburn LLP (2006):
- In this case, a law firm was sued for breach of contract and legal malpractice by a client
who claimed the firm failed to properly handle her case.
- The court ruled in favor of the client and awarded significant damages, emphasizing the
duty of care and competence owed by professionals to their clients in contractual
relationships.
These famous cases serve to illustrate the principles and nuances of contract law, from the
importance of clear intent in forming a contract to the enforceability of non-compete clauses
and the duty of care professionals owe to their clients.[6]
6. Case Studies on Breach of Contract
Conclusion
In the world of agreements and promises, the concept of breach of contract is vital. A breach
occurs when one party in a contract fails to carry out their end of the bargain. However, not
every breach is the same. Some are major, like when someone violates the most crucial
clause, and some are minor, like when they make a minor error.
The other party typically has the right to declare, "We're done with this contract," and they
may also request monetary reparations in the event of a significant breach.
Smaller breaches typically result in the continuation of the contract, but the party that
violated it may still be responsible for the issues they created.
Sometimes, people will claim they can't or won't carry out their end of the bargain before the
actual breach occurs. This is known as an anticipatory breach, and it's frequently treated as
such by the other party.
And in cases where there are good reasons—for example, an improbable event occurred or a
major error was made by both parties—the party that violated the contract may be able to
mount a defense.
It's critical for individuals, companies, and even attorneys to comprehend all of this. It helps
everyone understand the potential consequences of broken promises and how to handle them.
Therefore, understanding breach of contract law is helpful in day-to-day life, regardless of
whether you're in business or just making a basic promise
References
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Introduction
Understanding of Contract
Types of Breach of Contract
Remedies for a Breach of Contract
Defenses to a Breach of Contract
Case Studies on Breach of Contract