Ch 2: Discharge

Question 1

What is the absolute duty of parties under a contract?

Answer 1

To perform unless that duty is discharged.

Discharge can occur due to supervening events or changes in circumstances.

Question 2

What can discharge a party’s duty to perform under a contract?

Answer 2

• Impracticability
• Frustration of purpose
• Rescission by mutual agreement
• Release
• Destruction of or injury to identified goods

These reasons can occur after a contract is formed.

Question 3

What is impracticability in contract law?

Answer 3

A party’s duty to perform can be dismissed due to impracticability.

It applies when performance becomes illegal, goods are destroyed, the performing party dies, or performance becomes impracticable.

Question 4

List the conditions under which the defense of impracticability is available.

Answer 4

• Performance becomes illegal after the contract is made
• The specific subject matter of the contract is destroyed
• The performing party dies or becomes incapacitated
• Performance becomes impracticable

Impracticability is not available if the party assumes the risk of the event.

Question 5

What are the three elements that must be met for the defense of impracticability to apply?

Answer 5

• An unforeseeable event has occurred
• Non-occurrence was a basic assumption of the contract
• The party seeking discharge is not at fault

These conditions ensure that the party is not responsible for the impracticability.

Question 6

What happens when performance is only temporarily impracticable?

Answer 6

The obligor’s duty is suspended during the impracticability.

The obligation is not discharged unless performance is materially more burdensome afterward.

Question 7

Under what condition is performance discharged if a specific source of supply fails?

Answer 7

If the contract specifies that a particular source of supply be used.

This is true even if other sources are available.

Question 8

What is the doctrine of frustration of purpose?

Answer 8

It applies when an unexpected event destroys one party’s purpose in entering into the contract.

The frustrated party can rescind the contract without paying damages.

Question 9

What are the requirements for the doctrine of frustration of purpose to apply?

Answer 9

• The event must not be the fault of the frustrated party
• Its non-occurrence must have been a basic assumption of the contract

The frustration must be severe and not within the assumed risks.

Question 10

What is rescission?

Answer 10

The act of cancelling a contract and placing parties as close as possible to their original positions.

Rescission can occur by mutual agreement of the parties.

Question 11

What is a release in contract law?

Answer 11

A writing that manifests intent to discharge another party from an existing duty.

A release must generally be supported by consideration in common-law contracts.

Question 12

What happens if goods identified in a contract are destroyed before risk of loss passes to the buyer?

Answer 12

The contract is avoided, and both parties are discharged.

If the goods are damaged but not destroyed, the contract is avoided unless the buyer accepts them at a reduced price.

Question 13

What defense replaces the common-law doctrine of impossibility?

Answer 13

The defense of impracticability

This defense addresses situations where performance becomes impossible due to unforeseen events.

Question 14

List the conditions under which the defense of impracticability is available.

Answer 14

• Performance becomes illegal after the contract is made
• The subject matter of the contract is destroyed
• The performing party in a personal-services contract dies or becomes incapacitated
• Performance becomes impracticable

These conditions highlight specific scenarios that trigger the impracticability defense.

Question 15

What three requirements must be proven to establish the defense of impracticability?

Answer 15

• An unforeseeable event happened
• A basic assumption of the contract was that the event would not happen
• The party seeking discharge was not at fault

These requirements ensure that only genuinely affected parties can claim this defense.

Question 16

True or False: A party who assumed the risk of an event can claim the defense of impracticability.

Answer 16

False

This highlights the limitation of the impracticability defense.

Question 17

What happens during temporary impracticability?

Answer 17

The duty to perform is suspended

The duty is not discharged unless performance becomes materially more burdensome after the impracticability ends.

Question 18

What must a seller do if they can still deliver some goods despite impracticability?

Answer 18

The goods must be apportioned among all buyers

Buyers have the option to refuse acceptance and cancel the contract.

Question 19

What is the definition of frustration of purpose?

Answer 19

When an unexpected event destroys one party’s purpose for making the contract

The frustration must be severe enough to fall outside the assumed risks of the contract.

Question 20

What can a frustrated party do without paying damages?

Answer 20

Cancel the contract

This provides relief to the party whose purpose has been undermined.

Question 21

What is a release in contract law?

Answer 21

A writing that discharges another party from an existing duty

For common-law contracts, a release must be supported by consideration.

Question 22

Under the UCC, what is required for a written waiver or renunciation to be effective?

Answer 22

It must be signed and delivered by the aggrieved party

This is effective without consideration, differing from common-law requirements.

Question 23

What does rescission refer to in contract law?

Answer 23

Cancelling a contract and placing the parties as close as possible to their precontract positions

It involves mutual agreement and surrender of rights under the original contract.

Question 24

What prevents mutual rescission for contracts with third-party beneficiaries?

Answer 24

Beneficiaries’ rights have already vested

This means the contract cannot be rescinded if third-party interests are affected.

Question 25

What happens if identified goods are destroyed before the risk of loss passes to the buyer?

Answer 25

The contract is avoided ## Footnote No performance is required, and there is no breach for nonperformance.

Question 26

What occurs if the goods are only damaged and the buyer chooses to take them?

Answer 26

The contract is avoided unless the buyer takes the goods at a reduced price ## Footnote This allows for flexibility in dealing with damaged goods.

Question 27

If the risk of loss has passed to the buyer, what can the seller demand?

Answer 27

Performance ## Footnote This asserts the seller's right to enforce the contract despite the damage.