Contracts 3

Terms of Contract
Performance and Remedies
Classification of terms

Conditions: Essential terms of contract –breach entitles non-breaching

party to repudiate
Warranties: Non-essential terms – breach entitles non-breaching party
to damages only.
Cases: Opera singer cannot perform for the first week of a two-week
opera (condition – opera house owner can find a replacement and
sue for damages if any occur.
Opera singer will be 20 minutes late the first night –breachof warranty
entitles the opera house to damages only.
Late performance is only breach of warranty unless the contract has a
“time of the essence clause “

Elizabeth O´Leary
Remedies for non-performance or breach

 Compensatory damages
puts party back in position he would have been in if contract
had been performed
 Consequential damages – reasonably foresseable or provided for in
the contract
 Incidental damages Extras costs as a result of the breach
 Duty to mitigate reduce your damages –use reasonable alternative
 Liquidated damages -amount set forth in contract as the amount of
damages for breach. Distinguish liquidated damages from penalties
 Damages are generally awarded for physical injury or economic loss

Elizabeth O´Leary
Termination of Contract

 Performance of contract
 Failure of condition precedent (bank financing)
 Interference with performance
 Anticipatory repudiation
 Impossibility eg. Frustration (Icelandic Ash)
 Mutual agreement
 Statute of limitation
 Discharge in bankruptcy

I Elizabeth O´Leary
Equitable remedies

 Specific performance –unusual in common law -granted in cases of

sale of land or antique goods –
Not granted in employment law except in exceptional circumstances
 Injunction – to stop doing something (restrictive covenant)
 Rescission and restitution
 Reformation