Contract Law Problem Question - Breach of Contract Essay

Contract Law Problem Question - Breach of Contract - Essay Example A breach of contract occurs when a party to it acts inconsistently with his obligations either by implications or express words without lawful excuse. The onus is on Peter to prove that there was, in fact, a breach committed by David. Generally, the act that is allegedly in breach must have â€Å"such an effect, that the party in question has put it out of his power to perform his obligations† (Alfred C Toepfer International GmbH vs Itex Hagrani Export SA (1993) 1 Lloyd’s Rep 360, 362). Moreover, Peter is not required to wait for David to perform, and the effect of the breach is immediate (Hochester v. De La Tour (1853). In order for the breach to be classified as a repudiatory breach, that is one allowing Peter to set aside the performance of the contract, the breach must be one of condition or a serious innominate term and not warranty. The current scenario entails a breach of time, which is generally of the essence. It is arguable that this breach is one of condition, and the immediate consequence of that for Peter is his right to elect one of two alternatives; terminate the performance of or affirm the contract, communication either of them in a reasonable amount of time (Stocznia Gdanska SA v. Latvian Shipping Company (2002)). Since Peter has opted to stay at the house and continue running it as a guest house, he has decided to opt for the affirmation of the contract, which will be affected just by merely continuing with his obligations of running the business while maintaining a healthy profit (Davenport v. R (1877)). Thus, Peter is advised to affirm the contract and apply for an order of specific performance by exercising his right of election and issue a claim in damages.