When a defective or non-compliant product or service is delivered, the contract is often “rescinded” too quickly. There are exceptions but, as a general rule, a specific notice of default must first be sent, granting a reasonable period of time to still comply, before dissolution and damages can be applied. Moreover, the default must be of sufficient weight before there is a right to rescind the contract in whole or in part. So not every shortcoming can lead to dissolution of the contract.
It is also often forgotten that dissolution creates an undoing obligation: as a result of the dissolution, the delivered product or service has to be delivered back and payment has to be reversed. The services not yet delivered are mutually forfeited. Dissolution is not always desirable, especially in the case of a delivered service that is difficult to value. Partial dissolution or claiming performance with damages can sometimes be a better option in such cases. Contact a specialised lawyer in case of default. Unjustified dissolution can have major consequences.
Contact a specialized attorney before sending a notice of default!
