BetterLawNotes-5 (2)

CONTRACT LAW

An actual breach of contract occurs where the time for performance of a particular primary obligation having arisen, D fails, without lawful excuse, to perform it. While the concept of an actual breach of contract (or perhaps more accurately breach of a term of the contract) may be relatively straightforward, the consequences of a breach, in terms of the liability of both parties for continued performance of the contract, can be very confusing.

In summary, whenever there is an actual breach of contract, this gives rise to a (secondary) right to damages on the part of the victim. In some cases, instead of, or in addition to, an award of damages, the court will order the defaulting party to remedy the breach by performing the particular obligation (so called specific relief). Damages and specific relief will be examined in more detail in the section on Remedies.

In some cases, in addition to a claim for damages the victim of an actual breach of contract will have a right to terminate the contract. This can be an extremely important and effective remedy. We will look at termination in detail in the Remedies section.

Consequences of an actual breach of contract

In principle, every actual breach of contract gives rise to a right to damages on the part of the innocent party. However, unless that party can demonstrate that it has suffered some recoverable loss, damages will only be nominal – and, generally, not worth suing for.

Sometimes, an actual breach of contract will, in addition to a right to damages, also give the innocent party the right to terminate the contract. We will look at this in more detail below, but in essence a right to terminate will arise when:

(i) the primary obligation or term breached is a condition;

or

(ii) the primary obligation or term breached is innominate and the consequences of the breach are such as to deprive the innocent party of substantially the whole benefit which the parties intended that the innocent party would derive from the obligations remaining to be performed.

You cannot copy content of this page