Introduction
The modern developments in business sectors give liberty to individuals to make agreements with other parties they consider beneficial to their business course. Therefore, a contract is an exchange relationship generated through written or oral agreement involving two or more parties, with a given promise. In this case, agreement is indispensable to any contract. Additionally, there should be an intention for entering into a lawfully binding contract by both parties. An objective standard determines the qualification of the parties if they have reached agreement (Liuzzo, 2010). The common conflicts between business partners and associates reveal the extent to which breached contract may severe relationships calling for legal action. The law of contract seeks to solve these problems by providing actionable constraints whenever two parties agree on a business deal. It seems that many people may be lacking adequate information on essential elements necessary to enter into an enforceable contract.
According to Bix (2006), what each party considers the other as agreeing cannot be the decisive factor. There is an objective bystander whom should be acting reasonably and having all the facts related to the subject acknowledging that the concern parties agree. This should be on the necessary contract terms with the intent of making a legally binding association. The liberty to enter into a contract is accompanied by an obligation to recognize the consequences of the contract, as well as to accept liability for the contract abiding. This paper will prepare the parties to plan well for the outcomes of their own decisions. It illustrates that breaching of contract has consequential payment of damages. This paper will also present an understanding on the options made on damages as well as performance under contractual law.
Analysis
According to Bix, (2006), contract can be discharged by various ways including Substantial Performance and Inferior Performance. Moreover, it can be through strict or complete discharge. In some cases, contract performance should be the fulfillment of another person. Substantial performance, which is a minor breach, allows a party to keep back his or her performance. This is so only if the fault materially damages the real meaning of the contracted subject matter.
For instance according to the Reading Pipe case, Jacob & Youngs v. Kent, the variation from the mistake was insignificant. Therefore, the contract was carried out substantially based on its function. If some damages of the owner ought to be compensated, then it must be merely the variation in cost of the trademarks of pipe. This was because the expenditure of replacement was proportional with the attainment of commodity. The Substantial Performance Criteria consists of Good Faith Breach, Express Contract terms and consequences of imposing adherence to plain fulfillment.
Inferior Performance is a material breach allowing a non-breaching party to either affirms the contract in order to recover damages or withdraw the contract to recover compensation. In this case, the determining factor includes the degree to which offended party get deprivation of the expected gains. It also depends on the adequate compensation extend of the injured party. There are a number of rights for a non-breaching party to a contract. One has a right to be compensated the direct damages caused by the breach of contract. At the same time, he has a right for compensation of consequential damages. These are the losses incurred beyond the contract but associated with the breach. The Incidental damages compensation is another right for compensation.
Non-breaching party has different options for a remedy that include suspending his or her own performance awaiting remedy. This can be for a considerable time. One can also deduct the price of remedy based on contract price. Similarly, he can use remedy to seek to recover charge from breaching party. The best time for seeking counsel should be prompt because words that generate lateness material might be taken to be minor (Liuzzo, 2010).
Conclusion
In conclusion, a contract is an opening to generate a mutually favorable relationship. Thus, law should actively assist in guaranteeing adherence to contractual agreements. This will offer parties to carry on with adequate activities towards legal and binding contract. This will boost business activities that law of contract matters a lot.
Reference List
Bix, B. (2006). Contract Law Theory. Minnesota Legal Studies Research Paper No. 06-12. Web.
Liuzzo, A. L. (2010). Essentials of Business Law. (7th edn.).Boston: McGraw Hill.
