Discharge of Contracts

 

DISCHARGE OF CONTRACTS

Discharge of contracts implies a termination of the contractual agreement and the contract obligations come to an end.

·         Discharge by performance

·         Discharge by breach

 

Discharge by performance is where all parties to a contract have fulfilled their part of the terms to the contract agreement, so all primary obligations will cease.

Discharge by breach is where a party to a contract does not fulfill their part of the terms to the contract agreement. In the business environment, this is commonly seen when a credit customer doesn’t comply with the credit terms and doesn’t make the needed payments at the due date. In the situation of a breach of contract, legal action can be taken against the defaulting party.

 

Remedies for Breach of Contract

REMEDIES FOR BREACH OF CONTRACT

Remedies for breach of contract include:

·         Action for price

·         Action for damages

 

Action for price:

Where there has been a breach of a contract of sale, the seller can sue the buyer for the price of the goods.

Action for damages:

Where there has been a breach of a contract, a defaulting party may be asked to pay some money to the other party due to the loss or injury they may have suffered due to none completion of the contractual arrangement.

Other equitable remedies that could be sought may include:

·       Rescission is where both parties to the contract are restored back to the position they were in before they entered into a contract. So, a withdrawal which brings them to the pre-contractual position.

·       Quantum meruit is where the law requires the defaulting party to pay duly for the part of the contract obligation which has been performed to date.

·       Injunction is where the court orders the defaulting party to do or not to do a specific thing. This could be for the person to do or refrain from specific actions which could lead to removing something that is in breach of the contract.

·       Specific performance is where the court orders the defaulting party to positively complete his obligations to the contract.

·       Rectification is where the words of a document is altered due to the fact that it didn’t originally express the true intentions of the parties to the contract, so correcting an error.

What are pre-incorporation contracts?

WHAT ARE PRE-INCORPORATION CONTRACTS?

These are contracts entered into by a third party on behalf of a company which has not yet been formed. A pre-incorporation contract is binding on the third party who is acting on behalf of the unformed company.

·        A pre-incorporation contract is a contract entered into on behalf of a company before its incorporation

·       Until the company is incorporated, the company is therefore non existent

·        A non existent company is incapable to enter into contracts by itself and is unable to hire agents on its accord

Types of a Contract

 

WHAT ARE THE TYPES OF CONTRACTS?

There are different types of contracts and these include:

·         Void contracts

      Contract that cannot be enforced by law because it involves an illegal act or an agreement which is impossible to execute

·         Voidable contracts

      Contract that is valid but can be nullified because one of the parties is not bound to the contract legally, which can range from misrepresentation of facts, non-disclosure of key facts, agreement with a minor, coercion etc.

·         Valid contracts

      Contract that has all key elements of a contract correctly complied with by both parties to the contract and can be enforced by law