Question

This week, we examined the legal elements that form the basis of a contractual relationship including analyzing the ways in which a contract’s validity could be challenge. Within this discussion, we also assessed how a breach of contract occurs and we identified the remedies a party can seek. The dispute resolution techniques of mediation and arbitration were explored as an alternative to civil litigation.
For this week’s discussion, review the scenario provided and answer the following questions:
Andy purchased a one-acre tract of land with an ocean view from Bob for $1,000,000. One hour before escrow closes on the deal, Charlie, who knows of the pending sale to Andy, offers Bob $2,000,000 for the one-acre tract of land and Bob accepts. One hour later when escrow closes, Bob informs Andy that the sale cannot go forward because the property has been sold to Charlie.

•    Explain why a breach of contract occurred and identify who is the party at fault.
•    Choose the remedy that is most appropriate to help the non-breaching party.
•    Compare and contrast mediation versus arbitration as the best way to resolve this dispute. Justify your response.

Answer 1

1.

-A breach to a contract occured , when a party to avalid contract has failed to fulfill their side of aggrement. A breach of contract can occur as either a partial or complete breach.

-A party who failed to fulfill the terms of the contract is the party at fault.

- There are 3 main ways in which a party can be held liabile for breach of contract.

(i) Anticipatory Breach- This type of breach occures when a breaching party notify the non-breaching party that they will not be fulfilling the term of their contract.

(ii) Minor Breach- This occurs when aparty faile to perform a small details of the contract. In this the entrire contract has not been breached and can still be performed substantially-

(iii) Material Breach- This is when the breach is so substantial that it leads to cancellation of the contract.

-In the current situation Bob is the party at fault because he has faliled to sell the land to Andy as per the contract.

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2.

Following are the remedies available to the Non- Breaching party-

1. Equitable remedies-

- Equitable remedies are imposed when the money damages could not adequately cure the non breaching party. Following are the types of the equitable remedies-

(i) Specific Performance-Specific performance is an order by the court that requires the breaching party to carry out the contract as it was originally written. This type of remedy is rare.

(ii)Rescission - Rescission of the contract is a remedy that allows the non-breaching party to cancel his or her responsibilities under the contract. This remedy might be available when the contract was based on fraud or a mistake by one or both of the parties.

(iii) Reformation- It allows the parties to modify the contract

2.Legal Remedies-

-Legal remedies often takes place in the form of monetary damages, that are awarded to the innocent non breaching party-

- Following are the types of legal remedies-

(i) Compensatory damages

(ii)Liquidation Damages

(iii) Punitive Damages etc.

- in this current situation the Non breaching party Andy can go for Compensatory damage remedy to claim the monetary loss or can go for Specific performance remedy to require Bob to carry out the original contract.

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3.

- In Arbitrartion the Arbitrator hears the evidences and make the judgement which is enforceable on the both the party. Arbitration is like a court process as both the parties have to provide evidences regarding their side and the arbitrator have to evaluate and make the judgement. It is a Quasi judicial process.

- In Mediation,the process is a mediation withthe assisstance of a third neutral party. In mediation , parties donot do not reach a resolution unless all side aggrees.

- Arditrator is like a judge who will give the opnion based on the evidences. Mediator is like a settlor, who hepls the parties to reach at a settlement by mutual discussion.

- In this current situation the best way to resolve the issue is through Arbitration, because here Bob is the clear party to default the contract. Settlement through between them will not help, because Bob will always want to sell the property in higher price by terminating the contract with Andy.

- Andy can go through Arbitration as all the evidences clearly shows that Bob is the breaching party.