BREACH OF CONTRACT ESSAY Flashcards
(6 cards)
paragraph one - how may a contract be breached?
Partial Performance:
Only part of the agreed work is done.
Example: A bath is fitted but the shower is left incomplete.
➔ Note: Partial breaches may entitle the innocent party to withhold payment or claim damages, depending on materiality.
Delayed Performance:
The promised service is not completed on time.
Example: A month passes and the bathroom is still unfinished.
➔ Note: Delay alone is not always enough for termination unless it is serious (material).
Inadequate Performance:
The work is defective or below the agreed standard.
Example: Shower fitted, but only cold water comes out instead of hot.
➔ Note: Poor quality performance can amount to a material breach.
Anticipatory Breach:
One party shows before the due date that they won’t perform their obligations.
Example: Contractor delays starting by a month, signalling intention not to follow through.
Right to Cure: In some cases, the breaching party may be given a chance to fix their performance before harsher remedies (like termination) are allowed.
Cumulative Breaches: A series of small breaches over time can sometimes add up to a material breach.
Duty to Mitigate Loss: The innocent party must act reasonably to reduce (mitigate) their losses after a breach occurs.
case; paragraph one
White & Carter (Councils) Ltd v McGregor 1962 SC made an advertising contract with White & Carter to put up ads for his business. Later that same day, McGregor tried to cancel the contract before performance had started. White & Carter refused the cancellation, completed the work, and sued for the contract price.
The court (House of Lords) ruled that even though McGregor had tried to cancel (anticipatory breach), White & Carter could choose not to accept the breach, carry out the contract, and then sue for the agreed price
paragraph two
Remedies- range of options that the innocent party has to choose from when obligation is not fulfilled
Remedies available on the breach of contract will depend on;
* The nature of the breach
* What the innocent intends to secure
Performance or ultimately termination
Retention:
Withholding performance to pressure the other party.
Retention can be used, but only if the breach happened before notification of assignment.
How to asses whether retention is available as a self help remedy;
* Obligation is breached
Who owed who
Specific Implement:
Court orders the party to do exactly what was agreed in the contract.
➔ Note: Available as of right in Scots law unless impossible or inequitable.
Action for Payment:
Suing for the agreed price, or claiming back costs if work was defective or incomplete.
Resile (Withdraw from Contract):
Lawfully withdrawing without needing breach, if permitted by the contract terms.
➔ Example: Construction contracts often allow resilement if delay exceeds agreed limit.
Damages:
Financial compensation for loss due to breach.
➔ Note: Based on restoring the party to the position they would have been in had the contract been properly performed.
Repudiation (accepting anticipatory breach):
Treating the contract as ended if the other side shows they won’t perform.
➔ Note: Recognised in Scots law, but must be a clear refusal or fundamental inability.
case; paragraph two
Bank of East Asia Ltd v Scottish Enterprise 1997 Enterprise had a contract with another company (Atlantic Telecom) to make payments.
Atlantic Telecom assigned (transferred) its right to receive those payments to the Bank of East Asia.
Scottish Enterprise then tried to withhold payments (use retention) because Atlantic Telecom had allegedly breached the contract before the assignment.
The question was: could Scottish Enterprise still use retention against the Bank for those earlier breaches?
The court (House of Lords) ruled:
Scottish Enterprise could use retention, but only for breaches that happened before they were officially notified of the assignment to the Bank.
After being notified, they had to pay unless new breaches occurred.
paragraph three
Mutuality:
Both parties have rights under contracts
Rights are reciprocal in nature. Either both parties are bound or neither party is bound. So;
If one party does not perform their obligation the other party need not perform theirs
A party who has not performed or is unwilling to perform, cannot compel the other party to perform
Materiality:
The breach must be serious to allow retention, resilement, or termination.
➔ Test: Would the innocent party have entered the contract if they knew about this defect?
Utility vs Success:
For negotiorum gestio-style obligations and “useful performance” ideas: intervention doesn’t have to be successful, just useful (seen generally in Scots obligation law
case; Inveresk plc v Tullis Russell Papermakers Ltd (2010)
Tullis Russell argued that Inveresk had failed to meet the agreed quality standards for the goods supplied, which amounted to a material breach. The court agreed, confirming that the breach was serious enough to allow the innocent party to terminate the contract.
