Business Law: Termination of Contract and Breach of Contract

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

1BUSINESS LAW
Question 1:
Issue:
The issue associated with this case is that whether Terence is at the authority to terminate
the contract with Sara. There is an issue regarding the fact that whether Terrence can sue Peter
for breach of contract.
Law:
Termination of contract takes place when the agreement formed between the parties is no
longer recognized by the application of law (Bankins 2015). In this regard, it is worth noting that
termination of contract occurs when the parties to the contract are released from their contractual
responsibilities (Kraak et al. 2017). However, under the Australian law of contract, a termination
of contract can take place in various other ways-
1) When there is a breach of contract.
2) The inability to perform on the part of one of the parties.
3) By fraud.
4) By the performance of the contractual obligations of one of the parties.
5) By frustration.
A contract can be terminated by breach of contract when one of the parties to the contract
cannot perform their contractual liabilities (Arbel 2015). During this time, the parties fail to
deliver the contractual promises on their part by not performing their duties to the contract. A
contract can also be terminated when one of the parties is unable to perform the duties of the
contract as a result of sudden unforeseeable force which obstructs the parties from performing

2BUSINESS LAW
the contract. The termination of a contract occurs as a result of fraudulent act on the part of one
of the parties (Johnson and Sohi 2016). When one of the parties to the contract intentionally
misleads another party into entering into the contract by fraudulent means then the injured party
is at the authority to terminate the contract. The termination of contract takes place as a result of
frustration and due to this the parties can escape their contractual obligations. In this regard, it is
worth stating that termination of contract can come into effect by the performance of the
contractual obligations of the parties. In Airloom Holdings Pty Ltd v Thales Australia Ltd
[2011] NSWSC 1513, it was observed that the contractors claimed damages from the employer
for terminating the contract wrongfully. However, it was held by the Court that, the contractor is
not liable to recover the amount claimed as the contract was terminated on the basis of breach on
the part of the contractors.
A breach of contract takes place when there is a failure on the part of the parties to act
according to the terms of the contract. In this regard, the breaching party fails to act with the
responsibilities towards the contract. In NCON Australia Ltd v Spotlight Pty Ltd [2012] VSC
604 it was held by the Court that the proof of damage lies on the plaintiff. However, in case of
failure on the part of the plaintiff to prove the loss incurred by him, he shall be entitled to recover
nominal damages. However, various remedies are available for breach of contract which can be
emphasized as damages, specific performance and injunction. In case of breach of contractual
obligations, the remedy for damages as proved to be beneficial in providing appropriate solution
to the injured parties. However, contractual damages are not meant to serve as a punishment for
the parties who failed to perform their contractual obligations. It creates an authority on the part
of the plaintiff to sue the defendant for breach of contract and claim damages for the injury.
Application: