Performance, breach and frustration

The performance (teljesítés) of the contract must comply with such quality and quantity specifications that are either stipulated by the parties, called the express terms (a szerződésben kifejezetten meghatározott feltételek) or are implied by law, referred to as the implied terms (nem a szerződésben kifejezetten meghatározott, hanem pl. jogszabály erejénél fogva a szerződés részét képező feltételek). The timeframe, the divisibility, the possibility of partial performance (részteljesítés), of assignment (jogátruházás, engedményezés), or of the assumption of the debt  (tartozásátvállalás) may all be stipulated by the express terms, while some warranties, such as the warranty of title (jogszavatosság), are provided for by the implied terms. Warranties and guarantees (jótállás) serve double purposes: they ensure the performance of the contract and also provide remedy (jogorvoslat) for possible future problems.

If the contract is not carried out as agreed, this act or omission may amount to defective performance (hibás teljesítés) or to some other breach of contract (szerződésszegés). Depending on the nature and the seriousness of the defect or of the breach, the non-breaching party (nem szerződésszegő fél) has several options, including but not limited to the following:

• In the case of defective goods (hibás áruk), the buyer may choose between repair (kijavítás) or replacement (kicserélés) provided that the seller does not incur excessive costs; or they may also opt for the proportional price reduction (a vételár arányos leszállítása) of the goods or, if no other option can be exercised, they may also rescind (eláll) the contract.
• If one party defaults on (késedelembe esik) their obligations, the other party may give additional time for the performance, or refuse to accept the performance, or may even rescind (eláll) the contract.
• If the deadlines for payment are missed, or the payment is delayed, the non-breaching party may send reminders (fizetési emlékeztető) and demand letters (fizetési felszólítás) or may start negotiations, mediation, or arbitration (választottbírósági eljárás) in order to avoid litigation (peres eljárás) before the court.
• In the case of defective title (nem tehermentes tulajdonjog), the buyer has the right to demand the encumbrance (teher) being removed at the seller’s expense or an appropriate collateral (biztosíték, ) being given by the seller. If neither of these solutions is feasible or the seller is not willing to cooperate, the buyer may rescind the agreement and seek damages (kártérítés).
• If a contracting party refuses to make certain legal declarations under the contract without valid justification or proper legal grounds, the court may issue the statement instead of the party.

Finally, the performance of the contract may also become impossible, that is, the contract may become frustrated ( a szerződés teljesítése lehetetlenné válik, lehetetlenül), in which case the parties must settle their claims (elszámolnak) against each other concerning the services already rendered. If certain certain amounts  have already been paid or are due, the parties may apply the  the process of setoff (beszámítás). However, if one of the contracting parties is held liable for the performance becoming impossible, they have to pay damages to the non-breaching party.