Effects of Breach of Contract

Topics: Contract, Contract law, Contractual term Pages: 5 (1625 words) Published: November 28, 2012
Effects of a Breach of Contract

There are various types of contract with in the world of law such as civil law which deals with relations between individual citizens where as private law focuses on the relations between ordinary people on a day to day basis, both types of law include the law of contract. A contract is an agreement that is legally enforceable and therefore can be settled within a court of law, however how can we distinguish between a contract and any other form of non-legally enforced statement. If I promised to wash someone’s car yet I don’t in fact wash the car can I be held to a contract? In this case I can not simply because a promise is not a contract although there is no rule stating that all contracts must be in writing in fact a contract can very easily be done verbally or by action of which are known as parol or simple contracts. A statement is only a statement when it holds all four elements these being 1.Offer 2. Acceptance 3.Intention to create legal relations 4. Consideration.

Within a contract there are also what are known as clauses which simply express what both parties to the contract have agreed to. An example of a clause would be a car dealer selling his old car and we’d agreed on the price of the car in the process the car dealer says he will fill the car with petrol and I agree to only buy the car as long as there is no more than 15,000 miles on the dial and as long as the car had not been involved in any accidents. When I receive the car the tank is empty however that statement was a representation rather than a term as it did not hold a great deal of importance, however I find out that in fact the car had been involved in a car crash and had more than 15,000 on the dial and therefore the car dealer has breached the contract, therefore legal action can be taken. It is key to note the four tests that are carried out to figure out whether something is a term or representation these are 1. The importance of the statement 2. The time between making the statement and making the contract 3. An oral statement before a written contract 4. One party to the contract has special skills or knowledge. There are 3 types of terms 1. Conditions 2. Warranties 3. Innominate Terms. A condition is a basic but a fundamental part of the contract if breached the other party can end the contract, refuse to perform their part of the contract or continue with the contract but then sue for damages when completed. A warranty on the other had is not a vital part of a contract and if breached the other party must continue with the contract however they can then sue for damages at the end. An example of breaching a condition would be if a contract might specify that ABC Corp sells XYZ Corp 500 umbrellas for £5,000 on the condition that the umbrellas are inspected by XYZ Corp. for defects and their quality approved by the company. If the 500 umbrellas are inspected by XYZ Corp and found by that company to be defective, the contract becomes void. ABC Corp is not required to deliver the umbrellas, and XYZ Corp is not required to pay for the umbrellas. An example of breaching a warranty would be if a warranty reads "this umbrella is guaranteed to not tear, rip or break for two years from the date of its purchase." This is known as an express warranty, because it is very clearly stated. Another type of warranty is known as an implied warranty. Implied warranties are created by state law and essentially guarantee that a product will satisfy its intended purpose. When a warranty on a contract for sale of goods is breached, the party protected by the warranty, or the party purchasing the goods, is entitled to damages. Those damages may be specifically stated in an express warranty. For example, a product may guarantee that a product will last seven years or the purchaser is entitled to her money back. An innominate term can be either a condition or a warranty depending upon how serious he breach of contract...
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