Full Question: Compare and contrast the term termination of contract and breach of contract. Explain five essentials for free consent.
Answer:
Comparison of Termination of Contract and Breach of Contract
| Aspect | Termination of Contract | Breach of Contract |
|---|---|---|
| Definition | The legal end of a contract by mutual agreement, completion, or legal reasons. | A failure by one party to fulfill their contractual obligations. |
| Cause | Can happen due to completion, mutual consent, frustration, or law. | Occurs when one party does not perform as promised. |
| Consequences | Ends the contract, but may not involve legal action. | The non-breaching party may seek damages or remedies. |
| Legal Action | Usually does not lead to penalties unless stated in the contract. | Can result in lawsuits for damages or specific performance. |
| Effect on Parties | Both parties are usually free from obligations. | The breaching party may have to compensate the affected party. |
Essentials of Free Consent
For a contract to be legally valid, the consent of the parties must be free. Free consent means that an agreement is made voluntarily, without any pressure, fraud, or misrepresentation. Below are the five essentials of free consent:
Absence of Coercion
- Coercion means forcing a person to enter into a contract through threats, physical harm, or illegal pressure.
- Example: If A threatens B with harm to make B sign a contract, B’s consent is not free.
Absence of Undue Influence
- Undue influence happens when one party uses their position of power to unfairly influence the other party.
- Example: A doctor pressuring a patient to transfer property to them in return for continued medical care.
Absence of Fraud
- Fraud occurs when one party intentionally deceives the other to enter into a contract.
- Example: Selling a defective phone while claiming it is brand new.
Absence of Misrepresentation
- Misrepresentation happens when a party provides false information without intending to deceive, but it still influences the other party’s decision.
- Example: A car seller unknowingly tells a buyer that a car has a new engine when it actually doesn’t.
Absence of Mistake
- A contract is not based on free consent if both parties are mistaken about essential facts.
- Example: If both A and B mistakenly believe they are selling and buying a rare painting when it is actually a replica, the consent is not free.
Legal Aspects of Business and Technology Questions with Answer – 2024 Fall (BBA/BBA-TT/BCIS) – Click here