Changes to K Obligations Flashcards
Rescission - Overview
Rescission of a K serves to discharge duties under the K
- Occurs when parties agree to rescind their K
- Agreement to rescind is itself a new, binding K supported by consideration, except in at-will employment
Rescission - Limitations
Mutual rescission may be made orally / / (Excpetion) Writing required if the K to be rescinded is subject to the SoF and/or UCC
Parties cannot rescind a K if the rights of a 3rd party beneficiary have vested
Rescission - Unilateral Rescission
When only one party wants to rescind the K
- Usually only granted where there is a defense to K enforcement or formation (e.g. mistake, misrepresentation, duress, lack of consideration, etc.)
- i.e. as distinguished from mutual rescission, whereby parties agree to rescind a K, unilateral rescission often occurs as a court-ordered remedy where there is a valid defense to K enforcement or formation
Rescission - At-will Employment
Agreement may be terminated by either party
- Permanent employment is generally considered to be “at-will”
Modification & Novation - Overview
Modification occurs when parties change terms of the original K;
Novation is a new K that substitutes a new party into the original K
Modification - Definition
Subsequent change to terms of a K
Parties agree to discharge original K terms in favor of new terms
- Does not discharge the entire original K
Note: Parol Evidence is admissible to show subsequent modifications to a K
Modification - Requirements
1) Mutual Assent: mutual assent of the parties; and
2) Consideration: Generally found to be present b/c parties have limited their rights under original K by the modification
- modern trend allows for modificatication if it is fair and due to circumstances unanticipated when K was made
Modification - Requirements (Consideration - UCC)
No consideration required for a good-faith modification
- modification must be in writing if it falls within SoF
Novation - Definition
Parties agree to substitute a new party to perform
- Parties create a new K substituting a new party, who gets benefits and assumes duties that belonged to an original party to the K
Novation - Requirements (4)
1) a previous valid K
2) all parties, including new party (or parties), agree to a new K ;
3) New K extinguishes K duties between original parties; and
4) a new valid and enforceable K
- The original party is excused from performance and no longer has any K obligations or liabilities
Accord & Satisfaction - Overview
In an accord and satisfaction, parties to an existing K agree to accept different performance in satisfaction of the original, existing obligation
Accord - Definition
New agreement to accept alternative performance in lieu of the original performance obligation
Accord - Consideration
Generally required. Consideration of lesser value – OK if new consideration is either:
a) Different than originally bargained-for consideration,
b) to be paid to a 3rd party, or
c) to resolve a good-faith dispute concerning the original K
Satisfaction - Definition
Performance of the accord agreement
- Discharges the original K and the accord
