Breach of Contract in the Business World

Breach of prune in the Business humankind Table of Contents Executive Summaryiii I. Introduction1 II. Breach of Contract1 III. external Breach of Contract1 IV. corporal Breach of Contract2 V. Remedies3 VI. Remedies at Law3 VII. Remedies in Equity5 VIII. Summary6 IX. Bibliography8 Executive Summary This paper discusses the legitimate concept of a fail of take away and the options a agate line has in pursuing a outrage of take in charge case.It defines what constitutes a offend of require, how a caller whitethorn profane a contract, and it comp ars the level-headed distinction in the midst of an foreign and material breach of contract. This paper concludes with a description of what remedies ar forthcoming to the non-breaching fellowship when a contract has been breached. It describes the types of remedies at impartiality (pecuniary restoration) and remedies in equity that may be awarded in a breach of contract case. Introduction Contracts form the very fou ndation of every legal business endeavor.They seat dictate how a business is formed, the terms and conditions of employment, or a exchanges agreement between a business and its customer. In a perfect world, both parties would social welf be from a contract and no disputes would wax. In the real business world, delays occur, financial problems happen, and unexpected events may keep back a contract from being fulfilled. It is imperative that a business belowstands what constitutes a breach of contract, how a ships compevery may breach a contract, and what legal remedies ar available to recover any refine that may be incurred.Breach of Contract A breach of contract occurs when star companionship fails to carry out any term of a contract, written or oral, without a legitimate legal excuse (Hill, Breach of Contract). A businesses course of legal action against a breach of contract go forth depend on what type of breach has occurred, whether the breach is material (substant ial) or unbiased (minor), and what regaining have been incurred. Immaterial Breach of Contract An immaterial breach of contract does not advantageously impair the observe of an entire contract.An immaterial breach brooks the non-breaching party to serve for the actual insurance it sustains, but it does not excuse the injured party from its contractual obligations (Gifis, 2010). In the contract case of Jacob & unsalteds v. Kent, the court dealt with the matter of an immaterial breach of contract (Jacob & Young v. Kent, 1921). In the case, the plaintiff sued the defendant for not paying for the installation of pipes in his home.The defendant refused to pay because the defendant versed that or so of the pipes installed in his home were of the brand name Cohoes, instead of Reading. The defendant argued that the plaintiff should replace all of the shout out with the brand agreed upon in the contract before having to pay the plaintiff. The plaintiff refused and asked that the final stipend be made. The court found that the breach of contract by the plaintiff was immaterial because the pipes that were installed were the same type and feature to which the parties had originally agreed.The only difference between the two pipes was the brand name. The defendant was coherent to remit the final payment to the plaintiff and received no damages because the actual difference of quantify between the two brands of piping was zero. Material Breach of Contract A material breach of contract discharges the non-breaching party from further proceeding under the contract and entitles the injured party to sue for damages or for transaction of the contract (Jentz & Miller, 2007, p. 218).The Restatement (Second) of Contracts lists the following criteria to determine whether a precise failure constitutes a material breach In determining whether a failure to relegate or to offer performance is material, the following circumstances are monumental (a) the intent to whic h the injured party will be deprived of the benefit which he reasonably expected (b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture (d) the likelihood that the party failing to perform or to offer to perform will be restored his failure, taking account of all the circumstances including any reasonable assurances (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and dealing. (Restatement (Second) of Contracts, 1981) In the previously mentioned law case of Jacob & Youngs v. Kent, if the piping installed had been an inferior quality or material, the breach of contract would have been a material breach. In this case, the court would have agreed with the defendant and ordered the plaintiff to replace all of the piping with the correc t brand and quality of piping. RemediesA remedy is the relief given to an innocent party to enforce a right to compensate for the violation of a right (Jentz & Miller, 2007, p. 7). In law there are two types of remedies remedies at law and remedies in equity. Remedies at law are typically classified as monetary damages darn remedies in equity usually include rescission and restitution, particular performance, and contract reformation. A breach of contract case normally entitles the non-breaching party to sue for monetary damages (a remedy at law). In some cases, however, when the remedy at law is inadequate, a court will allow the non-breaching party to sue for an equitable remedy. Remedies at Law In about breach of contract cases, the non-breaching party is entitled to sue or monetary damages, also known a remedy at law. Monetary damages are designed to compensate the non-breaching party for the loss of the bargain and to purify and put the innocent party in the position they wo uld have sedulous had the terms of the contract been fulfilled (Jentz & Miller, 2007, p. 226). Compensatory Compensatory damages are an list of gold awarded by the court to compensate the non-breaching party for a particular harm or injury sustained as a direct payoff from the loss of a bargain due to a breach of contract. The amount awarded is intended to replace the amount the non-breaching party lost and nothing more than (Gale, 2010). ConsequentialConsequential damages or special damages are damages that arise only from the consequences of a breach of contract. Consequential damages may be awarded in a breach of contract case when it includes the loss of amplification or revenue as a result of a breach of contract. The damages may only be collected if it is determined that the damages were reasonably foreseeable when the contract was made (Hill A. , 1974). retributory Punitive damages are awarded to compensate the injured party, to punish the breaching party, and to dete r some others from committing the same act. Punitive damages are monetary damages awarded above and beyond what is requirement to compensate a party for their losses.Punitive damages are normally not awarded in a breach of contract case unless a civil wrong is involved but some suggest the stance on this may be changing (Sullivan, 1976-1977). nominative Nominal damages are a small amount of money (such as one dollar) awarded to the non-breaching party in a lawsuit to show that the loss or harm suffered was adept rather than actual. It is also used to establish that the defendant acted wrongfully (Hill G. a. , Nominal alter, 2010). Remedies in Equity In some breach of contract cases businesses are not interested in monetary compensation. In these cases, money is an light substitute to the original terms of the contract and the non-breaching party may coveting to sue for an equitable remedy instead. Rescission and RestitutionThe rescission of a contract essentially terminates the contract and returns the non-breaching parties to their former positions before the contract was made. Rescission is available when fraud, mistake, duress, or failure of consideration is enclose in a contract. The rescinding party is also entitled to restitution (Williston, 1922, p. 1455). Restitution requires both parties to return any goods or money that was given to the other party. Restitution is used to prevent the unjust enrichment of another party (Williston, 1922, p. 1456). Specific Performance Specific performance is an equitable court-ordered remedy that calls for the precise performance of the act promised in the contract (Wild, 2006).This remedy is often ordered by the court in the sale of a rare article or unique piece of grunge because awarding monetary damages would be insufficient to cover the comprehend loss by the non-breaching party. Reformation Contract reformation is an equitable remedy available to parties of a written contract when the contract does not actually express the intention of both parties. The mistake may be the mutual error of both parties to the contract, or the oversight of one party which the other knew or suspected at the time of entering the agreement. (American Home Ins. Co. v Travelers Indemnity Co, 1981) Contract reformation is also used when fraud is present and it allows the contract to be rewritten to reflect the parties true intentions. SummaryA breach of contract occurs when one party fails to perform any of the contract terms. The breach may be immaterial or material depending on whether or not the value of the contract has been substantially impaired. Remedies are the compensation awarded to the non-breaching party in a breach of contract case. There are two types of remedies for a breach of contract remedies at law and remedies in equity. Remedies at law are pecuniary damages awarded to the non-breaching party to compensate them for the loss of the bargain while remedies in equity may include resciss ion and restitution, contract reformation, and specific performance. Bibliography American Home Ins. Co. v Travelers Indemnity Co, 122 (Cal.App 3d 951,961 1981). Gale, T. (2010). Wests Encyclopedia of American Law. Retrieved April 21, 2010, from Answers. comhttp//www. answers. com/library/Law%20Encyclopedia-cid-6927283 Gifis, S. H. (2010). Law Dictionary. Retrieved April 21, 2010, from Answers. com http//www. answers. com/topic/breach-of-contract Hill, A. (1974). Breach of Contract as a Tort. Columbia Law step upiew (74), 40. Hill, G. a. (n. d. ). Breach of Contract. Retrieved January 6, 2010, from Law. com Dictionary http//dictionary. law. com/Default. aspx? selected=93 Hill, G. a. (2010). Nominal Damages. Retrieved April 21, 2010, from The Free Dictionary by Farlax http//legal-dictionary. hefreedictionary. com/Nominal+Damages Jacob Young v Kent, 230 (N. Y. 1921). Jentz, G. , Miller, R. (2007). Fundamentals of Business Law Summarized Cases (Seventh ed. ). Mason South-Western Cen gage Learning. Restatement (Second) of Contracts 241. (1981) Sullivan, T. J. (1976-1977). Punitive Damages in the Law of Contract The Reality and the Illusion of Legal Change. Minn. L. Rev (61), 207. Wild, S. (Ed. ). (2006). Websters saucily World Law Dictionary. Retrieved April 21, 2010, from Yourdictionary. com http//www. yourdictionary. com/law/specific-performance Williston, S. (1922). The Law of Contract. New York New York Baker, Voorhis & Co.