Contract Law Performance Remedies Please define each of the

Contract Law: Performance & Remedies

Please define each of these terms in your words: Recession, Modification, Compensatory damages, Consequential damages, Liquidated damages

Solution

Rescission
Rescission of a contract is unmaking of a contract i.e. if the parties wish to terminate a contract as if it never existed and there is a possibility to bring back the parties to their original position before the contract was signed. The right to recission can be exercised by one part or can be taken up on mutual consent to minimize any losses.

Modification

Modification of a contract refers to any possible changes which include updating, adding or deleting any points in the terms of the contract. It is only valid if it is acceptable for all the parties involved in the contract.

Compensatory damages

Compensatory damages refer to the damages caused by the party which breaches a contract to the non-breaching party, which need to be compensated based on an quantifiable estimation.

Consequential damages

Consequential damages refer to the damages caused due to unforeseeable or special circumstances that would have been avoided to minimize the damages. The compensation depends on how unforeseeable are the damages to the party.

Liquidated damages

Liquidated damages are the damages that both the parties in the contract quantify in monetary terms at the time of negotiation of the contract and are usually captured in the contract terms or clauses.