Performance of Contracts and Remedies for Breach Essay

Performance of Contracts and Remedies for Breach - Essay Example These include offer and acceptance, mutual agreement, consideration, competent parties, legality of purpose and proper form. People enter into contracts on a day-to-day basis for various reasons such as trading purposes (Boundy, 2010). An example of a breached contract is that of a car dealer, Mr. Richard, who imported a vehicle from Europe on behalf of Mr. McKenzie. Mr. McKenzie specifies that he wants a Mercedes E200 and pays three quarters of the total cost up front with an agreement that the remaining quarter to be paid upon delivery. However, Mr. Richard brings in a Mercedes 200E. Both parties have tried all the possible channels to settle the matter, but all is in vain. This makes them sort to seek legal action to solve the problem. At the end, the court rules in favour of Mr. Mackenzie and forces Mr. Richard to bring the contract to performance as agreed. This breaching can be analysed as below. Performance of a contract occurs when all the terms of a contract are fulfilled, a nd the contract has settled. Performance can either be complete, substantial or inferior. Complete performance occurs when the contract is discharged. As for substantial performance, the non-breached party can recover from the damages caused by the other party (Boundy, 2010). In this case, the non breaching party can have three or more options. The first one is to request the contractor to bring the contract to performance. ... Mr. Richard did not bring into performance the contract as agreed there by breeching the contract. Though he brought a Mercedes, it was not as specified in the contract (Goldman and Sigismond, 2010). Breaching of contract occurs when one party of the contract fails to meet part or all of their agreed requirements. A breach can be either actual or anticipatory. An actual breach occurs when a contractor completes the agreed contract partially or does not complete at all on the due date. An anticipatory breach occurs when one party communicates to the other well in advance that he will not fulfill his part of the contract before performing it. The non-breaching party is usually at liberty to choose one or more ways through which settlement of damages will take place. The main four types of contract breaches recognized by the law include Minor breach, Material breach, Fundamental breach, and Anticipatory breach. Damages compensate breaches caused in a contract. There are four main catego ries of damages. These are compensatory, consequential, liquidated and nominal. Compensatory damages restore the benefit of the agreement. The non-breaching party gets payment, an equivalent of what was to be paid if the contract was fully performed. This depends on the contract and the part that underwent breaching. Consequential damages occur because of external circumstances that affect the contract. Liquidated damages are reasonable amounts paid after both parties have agreed in advance before the contract is breached. In nominal damages, the breached party sues the breaching party and is paid some small amount though there is no financial loss (Goldman and