Question one:
A contract can simply be defined as a legally enforceable agreement. Legal enforceability denotes the existence of certain legal requirements whose absence will have an adverse effect on the enforceability of the contract. These requirements are what may be referred to as the elements of a contract and absence of any one of these elements may inevitably result in the contract being declared invalid by a court of law. There are various elements of a contract and these inter alia are: offer, acceptance, consideration, capacity, legality, lawful objective and consideration. While all these elements are important for any business that regularly gets into contractual agreements, this submission seeks to discuss two of these elements and their importance to any business.
Contractual capacity means that the parties to a contract must have the legal capacity to contract in terms of such parameters as age and state of mind. Consequently, where a business enters into a contract with a party who lacks contractual capacity either because they are minors or are insane, that contract is invalid on account of lack of contractual capacity and any loss incurred due to the contract will be borne by the business. The second element is legality. This means that a contract can only be valid if the undertaking in that contract is something permitted by the laws of the state or country in which the contract is made. This element is important to a business for the simple reason that where a business enters into a contract which is outrightly illegal as per the laws of the country, then the contract is illegal and the business entity will be liable for any losses arising from such a contract.
Question two:
A material breach of a contract refers to a breach of a fundamental term of the contract which usually entitles the innocent party to repudiation of the contract. On the other hand, a non-material breach of a contract refers to a breach of an innominate term or a warranty of a contract and the innocent part is usually entitled to damages but not repudiation of the contract. There are a number of both legal and equitable remedies which are available for breach of a contract. Legal remedies usually entail monetary compensation of the innocent party with the main legal remedy being damages. Equitable remedies on the other hand are remedies which are available at the discretion of the court. They include specific performance, rescission and reformation.
There are various grounds on which a party may be discharged from his obligations in a contract. These are also variously referred to as defences that a party may raise as to why they did not fulfill their obligations in a contract. A party may be discharged from his contractual obligations by reason of performance of his obligations under the contract. A party can also be discharged from his obligations due to frustration of the contract such that he is unable to perform his obligations under the contract. Other grounds include agreement between the parties to terminate the contract as well as a breach of a fundamental term of the contract.
Question three: Objective three
As indicated in earlier sections of this submission, the two types of remedies available for breach of a contract are legal and equitable remedies. Legal remedies are usually provided for in the law and in some instances are also provided for expressly in the contract. The main type of legal remedy is damages. Damages are envisaged to put the innocent party to the position they would have been if the contract had been performed. The two main types of damages are liquidated and unliquidated damages. In liquidated damages, the monetary amount is usually specified in the contract while the amount in unliquidated damages is set by the court. There are four types of liquidated damages, these are: compensatory, consequential, punitive and nominal damages. On the other hand, equitable damages are damages which are granted at the discretion of the court. There are four main types of equitable damages: specific performance, restitution, rescission and reformation. Specific performance is an order by the court compelling the party in breach to perform what was his undertaking under the contract. Restitution entails setting aside the contract and returning the contracting parties to the positions they occupied before the contract while rescission may be defined as an action that seeks to undo what had been done under the contract. Lastly, reformation is an equitable remedy where the parties are allowed to rectify their mistakes in the contract so that the contract can reflect the proper intention of the parties.
References
Chen-Wishart, M. (2012). Contract Law. New York: Oxford University Press.
