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Reading an Act related to contract damages (1)

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Newland Supply of Goods and Services Act 2005

Article Two: Rescission of Contract

Definitions

A fundamental breach is a breach of an essential term. Where a reasonable person would not have entered into the contract had he foreseen the breach and its consequences, that breach will be said to be fundamental.

1. (a) When the breach of the contract is fundamental, the injured party is entitled to rescind the contract. Rescission has the effect of putting the parties back to the position as if the contract had not existed.

(b) When the breach of the contract is not fundamental, the injured party may rescind the entire contract if he has first given the breaching party an extension of time for its performance.

(c) If, under the circumstances of the case, rescission of the entire contract is unjust, the term breached will be treated as a warranty.

Rescission Procedure

2. (a) When a contract is rescinded, the breaching party will restore to the injured party what he has received thereunder or – if restitution is impossible or unreasonable – pay him the value thereof; and the injured party will restore to the breaching party what he has received under the contract or – if restitution is impossible or unreasonable – pay him the value thereof.

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