Breach of Contract Example

Breach of Contract interpreterThe purchase and exchange agreement signed on August initiatory 2014, between Insurance terminal figure Limited (Depot) and Mr. Sanford (Sanford), is a levelheadedly stick skip. As a result, Depot exit be able to in effect enforce its contract with Sanford by taking sound action. Depots contract with Sanford satisfies the needful elements of consideration, consensus, intention, effectiveity, and capacityConsensusThere was a written agreement that was signed by both parties. This is proof of an offer and signed acceptance.ConsiderationSanford sold his clientele for $1.4 million to Depot this is an exchange.IntentIntention is presumed in commercial legal proceeding such as the sale or purchase of a duty. electrical condenser and legalityThere is no evidence to suggest that either troupe lacked capacity, and both were represented by legal counsel. There were no signs of illegality in the contract.Because the contract satisfies all major elemen ts outlined above, it is enforceable under the rules of contract law.What will be the likely result if they go to trial?If they go to trial, Depot must successfully demonstrate that Sanford breached at least one of the provisions of the contract. The contract outlines one major restrictive covenant a non-competition article. In this case, Depot can sue Sanford for breaching the non-competition provision of the purchase and sale agreement.The non-competition clause is legally enforceable as it is reasonable, and it does non contradict state-supported policy. The clause is also clear and unambiguous. It is specific as it de nones the clip pen of five years and geographical range of one hundred kilometres that nix Sanford from engaging in the business organization of insurance brokerage. In order for the clause to be enforceable, these constraints need to be considered reasonable. The geographic and age-based restrictions are assumed to be reasonable in this case.Sanford viola ted the non-competition clause by opening his impertinently insurance brokerage only two blocks away from Depot. Sanfords breach of the non-competition clause effectively gives Depot the right to claim damages. In order to be entitled to a remedy, Depot must prove in a court of law that Sanfords breach of contract adversely affected Depots business profits. Depot could then be awarded fiscal compensation (pecuniary damages) for the lost likely business. In addition, Depot may also be entitled to the trustworthy remedy of an injunction on Sanfords new business. This would mean Sanford would have go bad business operations until the five-year time span has elapsed, allowing Depot to establish itself as a major industry player in the area.In monetary value of solicitation, Sanford did non actively solicit customers these customers chose to switch to Sanfords new firm at their own will. If the contract did include a non-solicitation clause, Depot would likely be unsuccessful in t aking legal action with regards to it. Depot should snap its legal efforts solely on the breach of the non-competition clause.Should Depot sue with celebrate to the over argumentation of accounts receivable?Although there was an overstatement of the accounts receivable on Sanfords monetary statements, Depot should not sue for this misrepresentation. This is because Sanford innocently miscalculated the accounts receivable figures it was not through with(p) in a fraudulent or negligent manner. While the statement was a misrepresentation given the particular that it was false, unambiguous, concerned with a fact, and material, it does not fully satisfy all of elements of actionable misrepresentation. As a result, Depot should not sue.In the case of innocent misrepresentation, the result is the remedy of rescission. This authority that the contract would be cancelled, and both parties would return to their pre-contractual ownership positions. This is likely not in Depots best inter est, as they have already owned the business for two years, and have thus invested a significant amount of time and capital into the businesss development. Moreover, Depot has known about this error since approximately January 2015, and did not act upon it immediately. This reduces the likelihood of the remedy of rescission. Due to the innocent nature of the misrepresentation, and the fact that the only outcome is rescission, Depot should not pursue any legal remedy with regards to the misstated accounts receivable.What should Depot do?For the reasons outlined above, Depot should sue Sanford for breaching their contract, specifically the non-competition clause of it. The company is very likely to win a legal dispute against Sanford, and runs the risk of losing even more(prenominal) business to Sanford if they choose to bear on passive.Going forward, Depot should hire a lawyer to represent them, and to catch precedent cases in order to evaluate the most appropriate hunt of legal action. Depot should also consider whether or not the financial compensation that may be awarded in a lawsuit will outweigh the direct and indirect costs involved in a lawsuit. Legal action is most likely worth Depots time and money in this case, as an injunction on Sanford would allow them to establish themselves in the insurance industry and create customer relationships without Sanfords competition for the remaining time frame of the covenant. In order to avoid losing more customers to Sanford, who has many connections and more experience in the local competitive landscape, Depot should pursue legal action immediately.