ch 9. contracts Flashcards
What are the four main ways a contract can be discharged?
Performance
Breach
Agreement
Frustration
What is substantial performance?
When most contract obligations are met, but a minor term remains unfulfilled.
What is tender of performance?
When one party attempts to perform but the other party refuses to accept.
What is a breach of contract?
When a party fails to fulfill its obligations.
what is the difference between a condition and a warranty?
Condition: An essential term; breach allows termination.
Warranty: A minor term; breach allows for damages only.
What is fundamental breach?
A breach that goes to the root of the contract, depriving a party of its benefit.
What is repudiation?
When a party indicates they will not perform their obligations before the contract is due.
What is frustration of contract?
When an unforeseen event makes performance impossible or fundamentally changes the nature of the contract.
What are the remedies for breach of contract?
Rescission (canceling the contract).
Damages (compensation).
Specific performance (forcing completion of the contract).
Injunctions (court order to stop a breach).
What is the mitigation principle?
The injured party must take reasonable steps to reduce their losses.
What does it mean to discharge a contract by performance?
Each party fully completes its contractual obligations.
What happens when payment is tendered but refused?
The amount is still owed.
The creditor must collect the payment at their own expense.
(ex: if i try to pay rent in cash and the lease holder ONLY wants etransfer, i am now releived of my obligation cuz i attempted was refused, so the amount is still owed but i am not liable and its up for the creditor (lease holder) to accept from the debotor) me)
What is a breach of contract?
When a party fails to fulfill its obligations under the contract.
What are the two types of contractual terms?
Conditions (essential terms—breach allows termination).
Warranties (minor terms—breach allows only for damages).
What choices does the non-breaching party have in repudiation?
- Accept the repudiation and end the contract.
- Insist on performance and later sue if the breach occurs.
What is an exemption clause?
A contract term that limits liability in the event of a breach.
How are exemption clauses interpreted by courts?
Strictly interpreted against the party relying on them.
Must be clearly brought to the attention of the other party.
What is a force majeure clause?
A clause that excuses performance due to unforeseen events (e.g., natural disasters, wars).
How can parties discharge a contract by agreement?
Mutual agreement to end or modify the contract.
Novation (substituting a new party).
Accord and satisfaction (agreeing to new terms).
What is novation?
A process where:
A new party replaces an original party.
The original party is released from liability.
What is accord and satisfaction?
A new agreement where both parties agree to discharge the old contract based on new terms.
What are examples of frustration?
A fire destroys the subject of the contract.
A law change makes performance illegal.
A performer dies before fulfilling a personal service contract.
What is NOT considered frustration?
Increased cost or difficulty in performance.
A shared mistake by both parties.
How have courts modified the frustration doctrine?
Previously: “Let the loss fall where it lies.”
Now: Courts split deposits to pay for reasonable expenses.
