Breaches of Contract

Breaches of contract come about in a number of ways where some are slight and others may be more serious so that only some breaches would allow you to terminate for breach. One of the more difficult questions to answer, depending on the contractual terms, is whether the contract may be brought to an end in light of a specific breach.

When some contractual terms are breached, and they go to the "root of the contract", it is regarded as a "fundamental breach". A fundamental breach is something different to repudiation as there may still be an intent on the part of that party to perform their obligations.

Another type of breach is one that relates to an essential term of the contract, however, this is not always easy to determine. That is particularly so since some of the terms of the contract may be non-essential (also known as a warranty) which when breached would not allow termination. There are on top of that intermediate terms which are sometimes referred to as innominate terms and breaches of these terms may or may not permit you to end the contract depending largely on the consequences.

Sometimes a party repudiates a contract by displaying an intention for them to not be bound by the contract. Where there is such repudiatory conduct the innocent party may need to make an election to either affirm the contract or end it. The difficulty is working out whether or not the conduct amounts to a repudiation or not.

There may of course be some other ways to end the agreement, quite apart from what is referred to above, including when there is a statutory right to end the agreement, where there is equitable fraud or perhaps common law misrepresentation.

 

 

Potential Scenarios - Breach of Contract Cases

Here are some of the typical breach of contract scenarios: -

  • A dispute between a landlord (lessor) and tenant (lessee), regarding a commercial lease, about whether or not it was validly terminated. This will require consideration about remedies such as damages and possession;
  • When a vendor issues a notice to complete in a contract for the sale of land making time of the essence and it is not itself ready, willing and able to complete then it may not rely on the purchaser's breach as a basis for terminating the contract in accordance with the decision in Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd.
  • A purchaser who gives a cheque, that is post dated, to the vendor (or agent) on the date of the auction of real property may find that the vendor terminates the contract for breach as a "post dated cheque" may not be a cheque for the purposes of the contract entered into as in Ma v Adams.

Important Quotes in Cases on a Breach of Contract

"A fundamental term of a contract is a stipulation which the parties have agreed either expressly or by necessary implication or which the general law regards as a condition which goes to the root of the contract so that any breach of that term may at once and without further reference to the facts and circumstances be regarded by the innocent party as a fundamental breach." - referred to in Shevill v Builders Licensing Board [1982] HCA 47

Let Us Help You

  • understand whether the breaches complained of amount to a breach that would permit you to end the contract;
  • appreciate the difference between a fundamental breach, a breach of an essential term (a condition), a breach of a non-essential term (also known as a warranty), a breach of an intermediate term (also known as an innominate term), and conduct amounting to repudiation (including anticipatory breach);
  • consider other concepts, such as discharge by frustration, which may have the effect of releasing the parties from their obligations;
  • know whether your contract is voidable due to a "mistake in equity";
  • keep in mind that certain statutes may provide you with separate rights for ending a contract;
  • how the limitation periods operate to a contractual breach and when the last day is to bring a cause of action before your rights as they exist could be lost

* This content does not purport to give legal advice. Readers must obtain their own legal advice, that applies to the particular circumstances of their case, before taking any action at all.