A contract is terminated when any of the following happens:
- Performance. When both parties fully performed the terms and conditions of a contract, the purpose of the contract has been accomplished and the contract is terminated. The emphasis is on full performance of each and every contract term or condition. This is , of course, the desired outcome of any contract. However, sometimes contracts are terminated for other reasons.
- Mutual rescission. An agreement between the contracting parties to terminate their respective duties under the contract is called mutual rescission. Both parties must mutually agree to discontinue the contract.
- Impossibility of performance. Performance may be impossible and beyond the control of the parties. For example, destruction of the physical improvements is a good excuse for impossibility of performance. The death of the buyer or the seller will usually be considered a reason for impossibility of performance, unless the real estate contract states otherwise.
- Lapse of time. Certain circumstances, such as lapse of time, will cause a contract to be terminated by operation of law. For example, a contract may be terminated as a result of the expiration of the statute of limitations. The words “Time is of the essence” in a contract mean that dates and time limits in the contract must be met.
- Bankruptcy. The bankruptcy of one of the parties will not in itself discharge the contract. If the bankruptcy party is the seller, however, control of the asset will come under the control of courts. A court-appointed trustee will be charged with liquidating the asset.
- Breach. A contract is breached when one of the parties fail to perform and the law does not recognize the reason for failure to perform as valid. The aggrieved party may sue over a breach of contract.
Remedies for Breach
The Florida Real Estate Commission ordinarily has no authority or jurisdiction over breach of contract actions. There are four legal remedies for breach of contract:
- Specific Performance. If awards of money damages do not afford sufficient relief, the wronged party may sue for specific performance to have the courts force the other party to perform as the contract specifically states. This action is termed a relief in equity because such judgements are awarded in a court of equity.
2.Liquidated Damages. Frequently the parties will stipulate an amount of money in the contract (usually the earnest money deposit) to be paid in the case of default by the buyer. This amount is called liquidated damages to the seller.
3.Rescission. To rescind is to cancel or annul the contract. The court orders the parties placed back to their original positions as though the contract had never existed. This relieves both parties from their respective obligations under the contract. An injured buyer is entitled to the return of any earnest money , and the seller is obligated to return any earnest money or payment received
4.Compensatory damages. Another remedy for breach of contract is a suit for damages. Usually the party bringing suit seeks an amount of money equal to the extent of loss suffered (compensatory damages). A wronged party may find that a certain property was misrepresented but decide to accept the property and, in addition sue for damages. On the other hand, the buyer may de4cide to refuse the property and still sue for damages.