In order for a contract to be valid. Four elements must be present in an agreement, namely, an offer, an acceptance, consideration, and no defenses (Blum, 2013). An offer refers to a communication made by a speaker that creates as reasonable expectation in the listener that the speaker is willing to enter into an agreement according to the specific terms (Blum, 2013). An acceptance is an expression of assent from the listener to the terms of the offer (Blum, 2013). Consideration refers to a promised action that the speaker and listener agree to do or not do that they did not already have a pre-existing duty to abide by (Blum, 2013). In other words, consideration is the legal obligations that either party agrees to fulfil in order to complete the contract. Lastly, no defenses refers to the finding that the contract is not fundamentally void or voidable, such as if it were an agreement to perform an illegal act (Blum, 2013). Applying these elements to the agreement between Antonia and Jonathan, and it is clear that they established a valid contract in which Antonia will pay $300,000 for the use of Jonathan’s special “sniffer” dogs for six months. Antonia made and offer, Justice excepted, and both are now legally obligated to perform the agreed upon terms. An important and additional term is that Antonia can fire Jonathan prior to the completion of the contract if he does not perform as agreed on and as soon as she provides a week’s written notice. As was not a contract for goods, there were no warranties.
Once a valid contract is formed, generally two actions occur. Either the contract is performed as agreed upon or the contract is breached. Breached refers to the failure of one or both parties to fulfil or perform the agreed upon terms of the contract. A breach can be either minor or material (Cohen, 1997). A minor breach is one in which the harmed party nevertheless realizes the majority of what they wanted despite the breaching party’s failure to perform. A material or major breach in one where the harmed party received little or none of what they wanted as a result of the failure of the other party to perform. In the case of Antonia and Jonathan, it is clear that Jonathan failed to perform the terms on the contract by not providing a specialized “sniffer dog”. However, a court would most likely find that the breach was minor in that it: was only one dog for a limited time period, and there were other specialized “sniffer” dogs on duty that might have been able to back up the ordinary dog. Moreover, Jonathan had faithfully performed the terms of the contract at that for a third of the contract’s duration. In other words, the hardship suffered by Antonia as a result of Jonathan’s breach was not debilitating, especially in regards to the fact that no police targeted the nightclub for inspection.
When a breach occurs, the harmed party has a number of options available to her, and the breaching party has a number of obligations than can be imposed on him. The options that are available will depend mainly on whether or not the breach was minor or material. A minor breach normally required the breaching party to provide a remedy to the harmed party. It is important to note, that in a minor breach, the harmed party is still required to fulfill their terms of the contract. If the breach was material, then the harmed party can declare that the contract has been terminated and either: sue for damages, require specific performance, are seeking restitution. Damages can be: (1) compensatory, which refers to the amount of money that would put the harmed party in the position that they would have been if the contract was performed; (2) punitive, which would be the amount of money that would be deemed an appropriate punishment for the failure to perform (Mallor et al., 2001). Specific performance, as the name suggests, refers to a requirement forcing the breaching party to perform as originally agreed. Restitution refers to an amount of money that puts the injured party back in the financial position that they would have been if they never entered into a contract (Rendleman, 2015). In Antonia and Jonathan’s case, since the breach was minor, what should have occurred was that Antonia should have asked Jonathan for a remedy, which he would have been required to provide. Possible remedies could include a discount on the price paid for that week’s service or perhaps an extension of a week’s service of the guard dogs for Antonia’s night club.
A special type of breach on a contract is known as an anticipatory breach. This type of breached is defined as an unconditional refusal by one party to fulfil or perform the terms of the contract (Squillante, 1973). An unconditional refusal can be expressed by a party’s word or actions indicating that they will not comply with their obligations. As soon as one party makes clear their unconditional refusal, the non-moving party can immediately claim breach of contract, terminate the contract, and sue for damages, specific performance or restitution (Squillante, 1973). In this case, Jonathan’s minor breach, as mentioned, still required Antonia to abide by the terms of the contract. In other words, the contract was still in force. Her statement to Jonathan that “she never wanted to see him or his dogs again” could reasonably be deemed as her unconditional refusal to continue to abide by the contract. Accordingly, Jonathan had the right to immediately terminate the contract and file a suit against Antonia for a material breach of the contract.
References
Blum, B., 2013. Examples and Explanations: Contracts. 6th ed. New York: Wolters Kluwer Law & Business.
Cohen, A.B. 1997. Reviving Jacob and Youngs, Inc. v. Kent: Material Breach Doctrine Reconsidered. Villanova Law Review, [online] http://www.digitalcommons.law.wne.edu/cgi/viewcontent.cgi?article=1181&context=facschol [Accessed 22 May 2016].
Mallor, J.P., Barnes, A.J., Bowers, L.T. & Langvardt, A., 2012. Business Law and the Regulatory Environment. 15th ed. New York: McGraw-Hill Education.
Rendleman, D. 2015. Measurement of Restitution: Coordinating Restitution with Compensatory Damages and Punitive Damages. Washington and Lee Law Review, [online] Available at http://law2.wlu.edu/deptimages/law%20review/68-3n.7Rendleman.pdf [Accessed 22 May 2016].
Squillante, A. Am. 1973. Anticipatory repudiation and retraction. Valparaiso University Law Review, [online] Available at http://www.scholar.valpo.edu/cgi/viewcontent.cgi?article=1761&context=vulr [Accessed 22 May 2016].
