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Lecture

Day 7


Department
Accounting
Course Code
ACTG 2P40
Professor
Books

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Breach of Contract: chapters 14 & 15
Effect of Breach
1. Fundamental Breach
a. Definition: the aggrieved party has lost all or substantially all of the
benefits of the contract such that what they are getting is substantially
different from what they contracted for
i. Breach (not necessarily fundamental): Service is
incorrect/incomplete
ii. Gets to treat the contract as “over with” (this is the ONLY type
of breach this is applicable for)
b. Conditions vs. warranties
i. Conditions: essential terms
ii. Warranties: non-essentials
1. Breach of a warranty does not give you fundamental
breach
2. Repudiation **
a. Express repudiation
i. One party expressly tells the other they don’t intend to
perform
b. Anticipatory breach (2 options)
i. Can wait to see if breach happens
ii. Can accept the breach and have the negligent party pay the
difference
1. ALWAYS TAKE THIS OPTION. (don’t risk frustration)
3. Exemption Clauses and their Effect on Breach
i. Like onerous terms
ii. Interpreted as narrowly as possible
1. Court will apply the exact meaning of the words,
nothing more (limited to whats on the page)
b. Negotiation or standard form
c. Notice of exemption clause
i. Note time: onus on the party trying to prove …
d. Previous dealings
e. Exemption unusual
i. Cannot have an exemption clause from a fundamental breach
ii. Ex “not responsible for return of goods”
f. Written & signed contract
i. Parole evidence
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