46 terms

Business Law 1 - Chapter 17

Performance & Discharge
Terminate ones contractual duties.
Best way to dischage ones contractual duties....
Perfomance of those duties.
Absolute Promises
They must be performed or the parties promising will be in breach of contract.
Possible futute event, the occurance or nonoccurance of which will trigger the performance of a legal obligation or terminate an existing obligation under a contract.
Kinds of Conditions
-Conditions Precedent
-Conditions Subsquent
-Concurrent Conditions
-Express & Implied-in-fact Conditions
Condition Precedent
A condition in a contract that must be met before a party's promise becomes absolute.
Condition Subsequent
An event that, if it occurs, discharges a duty of performance in a contract
Concurrent Conditions
Conditions that must occur or be performed at the same time; they are mutually dependent. No obligations arise until these conditions are simultaneously performed.
Express Conditions
A condition specifically and explicitly stated in a contract and usually preceded by words such as conditioned on, if, provided that, or when
Implied in Fact Conditions
- A condition that the parties intended, but did not expressly state
- Can be inferred from the reasonable meaning of the parties' actions, words and outward conduct
Unconditional offer to perform by one who is ready, willing, and able to do so
- A legal offer of something offered in payment.
Discharge by Performance
The contract comes to an end when both parties fulfill their respective dities by performing the acts they have promised.
Types of Performance
-Complete Performance
-Substantial Performance
Complete Performance
When a party performs exactly as agreed, no question to whether the contract has been performed.
Substantial Performance
Performance that does not vary greatly from the performance promised in the contract and must create substantially the same benefits as those promised in the contract.
-Not perfect, the other party is entitled to damages to compensate for the failure to comply with the contract.
Performance to the satisfaction of one of the parties
Occurs only when subject matter of a contract is personal. Its performance must actually satisfy the party to whom the performance is owed. This party must act in good faith.
Performance to the satisfaction of a third party
-Must satisfy a party not to the contract. (A supervisor perhaps)
-Reasonable person std/Actual party must be satisfied
Breach of Contract
-Nonperformance of a contractual duty
-Entitles the nonbreaching party to sue for damages.
Material Breach of Contract
-When perfomance is not at least substantial
-Discharges the nonbreaching party from the contract.
Anticipatory Repudiation
-Before either party to a contract has a duty to perform, one of the parties may refuse to carry out his or her contractual obligations
-Discharges the nonbreaching party from performance. (Repudiating party can retract the repudiation by proper notice & restore original obligations)
-Material Breach
Anticipatory Repudiation as a Material Breach
1. Nonbreaching party should not be required to remain ready & willing to perform when the other party has already reputiated the contract.
2. Nonbreaching party should habe the opportunity to seek a similar contract elsewhere.
Reasonable Time
This is implied if no time frame is stated in the contract.
Discharge by Agreement
Agreement of BOTH parties to end a contract.
Kinds of Discharges by Agreement
-By Rescission
-By Novation
-By Substituted Agreement
-By Accord & Satisfaction
Discharge by Recission
-By using Mutual Rescission
-Agreements when no performance has been made = enforceable (orally/written contract)[EXCEPT: UCC Sale of goods & Realty = writing]
-Agreements where one party has fully performed = not enforceable
Mutual Rescission
An agreement to terminate a previous agreement. Both parties are in agreement to terminate the contract. Also referred to as a "contract to destroy a contract".
(Must be in writing
Discharge by Novation
-When both of the parties to a contract agree to SUBSTITUTE a third party for one of the original parties.
4 Requirements of a Novation
1. A Previous valid obligation
2. An Agreement by all parties to a new contract
3. Extinguishing of the old obligation
4. A new contract that is valid
Discharge by Substituted Agreement
A compromise, or settlement agreement that arises out of a genuine dispute over the obligation under an existing contract.
Discharge by Accord & Satisfaction
Parties must agree to accept performance that is different from the perfomrance originally promised.
Discharge by Operation of Law
-Material alteration of the contract
-Running of the statute of limitations
-Impossibility/Impractability of performance
Alteration of the Contract
Altering written contracts which discharges the innocent party.
Statutes of Limitations
Ater the applicable limitation period has passes, a suit can no longer be brought.
Discharge in Bankruptcy
The termination of an obligation. A discharge in bankruptcy terminates the debtor's obligation to pay the debts discharged by the court.
Impossibility of Performance
A doctrine under which a party to a contract is relieved of her or his duty to perform when performance becomes objectively impossible or totally impracticable (through no fault of either party).
Objective Impossibility
"It can't be done"
Subjective Impossibility
"I'm sorry, I simply can't do it"
3 Situations that allow Discharge on Impossibility of Performance
1. When one of the paries to a personal contract dies or becomes incapacited prior to performance
2. When the specific subject matter of the contract is destroyed
3. When a change in law renders perfomance illegal
Commercial Impractibility
UCC- performance can be excused when basic assumptions the parties made when they entered the contract have changed. same as common law standard of impossibility.
Frustration of Pourpose
Contract will be discharged if supervening circumstances make it impossible to attain the pourpose both parties had in mind when making the contract.
5 Kinds of Contract Discharges
-By Agreement
-By Performance
-By Breach
-By Operation of Law
-By Failure of a Condition
By Agreement
-Mutual Recission
-Accord & Satisfaction
By Performance
By Breach
-Anticipatory Repudiation
By Operation of Law
-Material Alteration
-Statute of Limitations
By a Failure of a Conditon
If performance is conditional, duty to perform does not become absoloute until that condition occurs.