ch.20 Flashcards
(26 cards)
What is Discharge?
When one or both of the contracting parties are no longer legal obligated to perform any obligations under the contract
What circumstances result in Discharge?
- Occurrence or nonoccurrence of a condition
- Complete or substantial performance
- Material breach
- Mutual agreement
- Operation of law
What is a condition?
An event or action that must occur before performance is required
What type of conditions are there?
- condition precedent
- condition subsequent
- concurrent conditions
Are conditions required to be in writing?
No, they can be either expressed or implied
What happens if the conditions aren’t met?
No further obligation by the contracting parties
Are there circumstances where law dictates parties are excused from performance?
Yes, at times the law states performance is discharged
What is performance?
Completion of obligation(s) under the contract
What are the types of performance?
- complete (all)
- substantial performance
What is complete substantial performance?
- Completion of nearly all terms of agreement
- Honest effort to complete all terms
- Departure from terms of agreement not willful
What is Anticipatory Repudiation?
When Party A becomes aware of facts that if true, make it impossible for Party B to perform under the contract
Can Parties agree to discharge each other from performance?
Yes, parties can mutually agree that performance is discharged
What is the effect of Anticipatory Repudiation?
Party A is discharged from obligations under contract and can sue Party B immediately for breach, and damages, if any
What is the effect of Complete and Substantial Performance?
A party achieving either Complete or Substantial Performance has no further obligation(s) under the contract
What is mutual recission?
Both parties agree to discharge each other from their mutual obligations
When do we see anticipatory Repudiation?
- Often occurs when market conditions change and Party B realizes it will not be profitable
to fulfill terms of contract - Can occur either through express indication of intent or action inconsistent with intent
to fulfill contract when performance due
what is novation?
Original parties and a third party agree that the third party will replace an original party and the original party will be discharged
What is a substituted contract?
ties agree to substitute new contract in place of original contract
What is accord and satisfaction?
Parties agree that one party will perform duty differently from performance specified in original agreement; after new duty performed, the party’s duty under original contract is discharged
What situations result in discharge by Operation of Law?
- Alteration of contract
- Bankruptcy
- Tolling of statute of limitations
- Impossibility of performance
- Commercial impracticability
- Frustration of purpose
When can we sue for damages?
Generally, either party can sue the other for damages when a party breaches terms of
the contract
What are the types of damages?
- Compensatory
- Consequential (special) damages
- Punitive damages
- Nominal damages
- Liquidated damages
What should I consider prior to filing suit against the breaching party?
- Likelihood of success
- Desire/need to maintain ongoing relationship with potential defendant
- Possibility of getting better/faster resolution through alternative dispute resolution
(ADR) - Cost of litigation/ADR compared to value of likely remedy
- Primary goal of all business actions should be to engage in activity that puts the business
in a better financial position
Are there any obligations of the non breaching party?
In all cases, nonbreaching party must mitigate damages
