What is breach of contract?

Case breakdown: Movie Hum Hain Rahi Pyaar Ke

The above scene shows how Rahul Malohtra (Played by Aamir khan) is about to breach the contract with Mr. Bijlani (played by Dilip Tahil). He needs to deliver the assignment within 15 days but he is in no position to complete the order. He is asking for more money from Mr. Bijlani but he’s not willing to listen as the contract has been signed and he wants his assignment to be delivered on time.

Mr. Bijlani has given a contract to Rahul Malohtra’s factory to provide a batch of shirts. For this order, he has already paid Rs. 12,00,000 and  given Rs. 5,00,000 of cloth material. The order isn’t completed and more money and material are required.

Rahul Malhotra find himself in adifficult situation because the contract was signed between Mr. Bijlani and Rahul Malhotra’s brother-in law. Unfortunately, Rahul’s sister and brother-in-law passed away in a car accident. Now, Rahul has replaced his brother-in law in his factory.

When is a contract valid?

A contract is an act of promise between two or more  parties to offer something of value in exchange for a price. For a contract to be valid, there are certain conditions that need to be fulfilled.

Offer and acceptance

An offer is when one party presents something of value to another party. Other party accepts in exchange of a payment. When an offer is presented, other party has the option to either accept it or decline it. Once accepted, it becomes a binding contract. Offer and acceptance are crucial elements for a contract to be valid.

Consideration

Another important element of a contract is consideration.It can also be referred to as a benefit that parties receive in a contract. Majority of times, this can be money, but it could also be service, rights or interest. For example: A neighbor decides to share his/her wifi connection with  another neighbor in exchange for half the rental of wifi. In this contract, one neighbor receives the service while other receives money.

Intention

This can be referred to as ‘having the same mind” regarding the contract. Each party would have to live-up to their end of the bargain for a contract to be valid.

Legality

Another crucial element for a valid contract is legality. One cannot enter a contract with a person of unsound mind or a minor. These contracts are illegal and will become void. Gambling is unlawful, hence any gambling contract would also be considered as void.

What is a breach of contract?

A breach of contract is breaking of a promise or violation of terms and conditions that are mentioned in the contract. This breach can include late payment, agreed assignment not being delivered, not delivering on time etc. Since a contract is legally binding. Defaulting party can be sued in the court of law, if parties don’t mutually decide to reach a compromise.

Breach of contract can be minor or material.

When one party doesn’t receive the delivery by the due date, it generally falls under minor breach. Material breach is receiving a different articles than what was mentioned in the contract.

For example: A contract has been given for 100 school uniforms but when the order was received they were for 100 navy uniforms. This is a material breach of contract as the items received is not what the client requested.

What happens when one party of the contract dies?

Generally, when one party of the contract dies, in most cases contract becomes void. Void contract means those contracts that are not legally enforceable.

  • Committing a Crime
  • Gambling
  • A minor or a person of an unsound mind

In all the above cases, contract can be declared void too.

Not in all death cases, contracts can become void, it depends on the situations. In the scene above, contract is still valid i.e. enforceable.

Leave a Reply

Your email address will not be published. Required fields are marked *