Contracts
Contracts 101
The basics of the contract is as easy as it gets, OFFER, ACCEPTANCE and CONSIDERATION. It is exactly as it looks.
The offer to do something or refrain from doing something is accepted by the other and the consideration is anything of value.
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Breach of Contract
In the simplest form, it is the failure to meet one's obligations under the terms of the contract.
Generally speaking, there are four types of contract breaches: anticipatory, actual, minor and material.
- Anticipatory Breach is when one party announces, in advance of the due date for performance, that he intends not to fulfill his side of the bargain.
- Actual Breach occurs when one person refuses to fulfill his or her side of the bargain on the due date or performs incompletely.
- Material breach is if one party ends up with something significantly different than what was specified in the contract. A simple example would be a custom order for white frisbees, but the blue frisbees were delivered.
- Minor breaches occur when the contract was completed but there was some minor issue, using the frisbee example, the white frisbees were delivered a day late.
Remedies
In the event of a breach there are remedies available. There are compensatory damages as well as the seldom used "specific performance". There are two types of compensatory damages:
- Expectation damages are the monetary awards or remedies intended to make up for any loss experienced because of the breach of contract. Often these cover costs associated with loss of performance and seeking outside assistance to fill an order or provide a service.
- Consequential damages are intended to cover indirect damages. For example, if the frisbee company loses profits for a week because of an undelivered custom stickers, they might be able to collect consequential damages. In this case, the damages must come specifically from the breach and be reasonably foreseeable for everyone entering the contract.
Specific performance is seldom used because it is designed for very unique and one-of-a-kind items such as a limited edition vehicle, real estate or rare antiquities. Sure this list is nor exhaustive, but you get the idea.