Term and Termination 1

The same lawyer now gives his second reason as to why it is important to include a termination clause. Read what he says and answer the questions that follow using a full sentence.

“To move on to the second reason for including a termination clause, if you are a party to a contract you must always make sure that you can terminate it if the other party is in serious breach of his or her obligations to you. A court would refer to a serious breach as a “material breach”. A breach of a less serious kind, a minor breach, will only give rise to a claim for damages, not termination.
Most clauses of this type state that you have to give the other party a chance to solve the problem. In the legal profession we refer to this problem solving as “providing a remedy for the breach”. If we imagine a situation where one party is in breach and has not remedied that breach then the injured party might seek to terminate the contract on those grounds. So, what constitutes a material breach? This is a complicated question. A court will examine the parties’ intentions when they signed the contract, as well as the effects of the breach, in deciding whether or not it is material in nature. In general, however, a material breach must be very serious indeed. It must be a threat to the very purpose of the contract and not just an inconvenience”.

1	How does a court refer to a very serious or significant breach of contract?
	Answer:
2	What is a minor breach?
	Answer:
3	What right does a minor breach normally give rise to for the injured party?
	Answer:
4	What is the correct legal name for the solution that the party in breach gives when he or she solves the problem caused by the breach?
	Answer:
5	In order to be described as a material breach, what must the breach do with reference to the contract?
	Answer:

Answers
1. The court refers to a very serious breach as " a material breach".
2. A minor breach is a less serious kind of breach.
3. A minor breach normally gives rise to a claim for damages.
4. The correct legal name for the solution that the party in breach gives is "a remedy".
5. A breach must be a threat to the purpose of the contract in order to be described as a material breach.