chapter 9 Flashcards
(16 cards)
Principal methods of discharging a contract
Performance
Breach
Agreement between the parties
Frustration
performance
Contractual obligations are discharged when each party satisfactorily completes its part of the bargain
Substantial Performance
Tender of Performance
Independent Obligations
Substantial Performance
Most contractual obligations are fulfilled
Minor term not completed is a breach of warranty, compensable by damages
Contract discharged
Some contracts must be performed exactly
tender
When one party is ready, willing, and able and attempts to perform but performance is refused by other party
Person who attempted performance may sue other for damages
When payment is tendered and refused
Amount is still owed
Wait for creditor to collect, at creditor’s expense
Payment must be in legal tender
Canadian currency or otherwise as agreed
Delivery as specified or at reasonable time and place
Some obligations continue after contract is performed
E.g. warranties
breach
A contract is breached when there is:
Improper or incomplete performance
Refusal to perform
May lead to discharge of the contract
Conditions and Warranties
Conditions - terms essential to substantial performance
Where breached, victim relieved of obligations
Warranties - minor terms of contract
Where breached, performance still required
Parties may specify whether a contractual term is a condition or a warranty
exemption clause
Attempt to limit liability Strictly interpreted Must be brought to the attention of the party Limited warranties A type of exemption clause Usually actually a condition
Fundamental Breach
The breach goes to the very root of the contract
One party denied the benefit it bargained for in the contract
Courts will not give effect to some exemption clauses unless specific
Unconscionable, unfair, or unreasonable
repudiation
Repudiation (anticipatory breach)
One party indicates that they do not intend to follow through with their end of the deal
Can be expressed or implied from conduct
Victim may choose to
Accept the repudiation and end the contract, or
Insist on performance
Bound by choice
Discharge by Agreement
Contracts can be modified or ended by agreement
Bilateral or unilateral discharge
All rules of contract formation apply
Accord and satisfaction - parties agree to end contract based on some other consideration
Novation of contract
All parties must agree
New party substituted with complete liability
Old party is released from liability
contractual terms
Contract can specify conditions under which obligations begin or end
Some contracts are continued and may be terminated with reasonable notice
Conditions precedent—contract is binding only if some pre-existing condition is met
Conditions subsequent—the contract ends when some event or condition takes place
Some contracts anticipate events that may interfere with performance
A force majeure clause
Provides for discharge or responsibility for damage
frustration
Outside, unforeseen event which Makes performance impossible Changes the nature of the contract Not shared mistake When one party is responsible for an act that frustrates a contract, it is treated as a breach
If the obligations of the contract can be fulfilled in some other way, performance is required
Even if more difficult or costly
Statutory modifications
Formerly, “let the loss fall where it lies”
Allows courts to split deposit to pay costs incurred
Remedies for Breach of Contract
Rescission - returning parties to original position
Rectification - court corrects wording of a document
Damages compensate a victim
damages
Court tries to put victim of breach in the position they would have been in if the contract had been properly performed
In a breach of contract damages look forward in time
Tort damages look back
Special damages Specific costs and expenses General damages Estimate of what would be lost Punitive damages Rarely awarded Limitations Remoteness - breaching party must compensate for damages likely to be the result of the breach Mitigation - victims must make an effort to keep their losses as low as possible Acceleration clause Liquidated damages
Equitable Remedies
Specific performance An order to go through with the deal Where damages not adequate Not for personal services Injunction An order to stop breaching the agreement Mandatory injunction Interlocutory Accounting Court may order breaching party to disclose and pay profits Fiduciary relationship Quantum meruit Court orders payment for part performance
Equitable Remedies Are Discretionary
Laches Undue delay Undue hardship Clean hands Equitable remedy denied if claimant also guilty of some wrongdoing
