![]() ![]() A Fundamental BreachĪ common issue that arises in cases of breach of contract is whether the innocent party is entitled to treat the contract at an end (excusing that party of any further performance under the contract) but allowing that party to sue for damages. In the absence of contractual wording defining a party’s rights in the event of a breach by the other party, the general rule is that the innocent party is entitled to reasonable monetary compensation for the damages he or she has directly suffered as a result of non performance of the other party’s contractual duties. Remedies can include specific amounts of financial compensation. In those cases, generally the wording of the agreement determines the remedies available to the innocent party. Some contracts include wording defining what happens if one of the parties fails to perform one of his or her duties under the agreement. If one party, whether an individual or a business, fails to uphold the terms of a contract they have signed, that party has breached the contract and the innocent party can go to Court seeking a remedy. Consequences of Breach of Contract Seeking a Remedy from Court Contracts must be reasonably precise to be enforceableĪssuming that a contract is created and executed in a legally valid manner and for a legal purpose, failure to follow the terms of the agreement can have legal consequences. Anyone who signs a contract also must be of sound mind for the agreement to be valid. If someone consents to a contract by mistake, under duress, or as a result of a fraudulent representation of the contents of the agreement, the contract may be declared invalid by a court. All parties who sign a contract must do so of their own free will and they must intend to create mutual and reciprocal rights and obligations. The law requires certain conditions to be met for contracts to be valid. If you’re considering signing a contract, it’s important to understand the consequences of failing to honor the terms of the agreement, known as a breach of contract. Contracts of sale, for example, govern the rules for acquisition of property in exchange for payment. When one party, such as a person, company or an organization, offers to provide goods or services, and the other party agrees, a contract formalizes the understanding.Ĭontracts cover a variety of subject matter and types of agreements. Contracts set down in writing an agreement between two parties.
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