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Breach of a condition entitles the other party to terminate the contract (as well as claiming damages). The courts divide clauses into the following.Ĭonditions. The answer is that it only does so if the breach is important – ‘of the essence’. Breach, however serious, does not automatically terminate a contract – the question is whether it entitles the other party to terminate (‘repudiatory’ breach). Where time is of the essence, even a very short delay will entitle the other party to terminate.ĭischarge by breach. In relation to all other obligations, the House of Lords has suggested that in commercial contracts time is always of the essence. Time for payment is not ‘of the essence’ and so late payment is not a ground for rejection but If performance is offered late, is the other party obliged to accept it? The general rule is that time is not ‘of the essence’ unless the parties have made it so. In a ‘divisible’ contract a party may be entitled to payment for completion of particular stages. The court deems there to have been ‘substantial performance’.
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The partial performance has been accepted or The other party has prevented completion of performance or In an ‘entire’ contract payment only has to be made when performance is fully completed – there is no payment for partial performance, unless: The normal rule is that performance must be precise and exact to discharge the party’s obligations. The most significant issues are:ĭischarge by performance. This chapter looks at the termination of a contract by either completion of performance or breach.