Contracts and Legislation Flashcards
Conditions
Major terms of a contract. If breached, contract ends (if other party wants to end it).
Example: contract calls for sale of truck but seller delivers a mini-van.
Warranties
Minor terms of a contract. If breached, obligations continue but may seek damages.
Example: contract calls for sale of a navy blue truck but seller delivers a powder blue truck.
How do you tell the difference between condition and warranties?
Reasonable Person Test: if a party had known ahead of time that the term was going to be breached, would he/she still have entered into the contract?
What are the four ways to discharge of contracts?
1) Performance: complete (or almost complete) performance of contract.
2) Breach: breach of a condition of contract.
3) Frustration: an outside event makes performance impossible.
4) Agreement: where parties consent to end or modify contract.
Performance
Once parties have performed as required, contract, is discharged.
Example: a pizza shop contracts with an office to supply 100 pizzas for a staff party for $1000.
Tender of Performance
Ready, willing, and able to perform but other party refuses to accept performance.
Substantial Performance
Almost all obligations fulfilled, but a condition breached in a minor way. May seek compensation for small part remaining.
Example: contract calls for delivery of 100 pizzas but you only receive 98.
Breach
Incomplete or improper performance of contract.
Repudiation
Breach by refusal to perform.
Anticipatory Breach
repudiation before performance is due gives victim to two options:
a) continue to demand performance.
b) immediately treat contract as breached.
Frustration
Where circumstances outside the parties’ control cause one of the following scenarios:
a) contract impossible to perform
b) performance still possible but would lead to a completely different result.
Agreement
May modify or end a contract by agreement. All elements of contract must be present.
Condition Precendent
Contract begins only if conditions are met.
Example: in contract to buy a house, purchaser must first be approved for a mortgage.
Condition Subsequent
Terms in contract specify when continuing obligations will end.
What remedies can courts order for breach?
1) Damages ($)
2) Equitable Remedies (non-$)
Damages
Financial compensation to attempt to put victim in position she would have been in if contract properly performed.
Three Types of Damages
1) Specific Damages: can be easily calculated (lost wages).
2) General Damages: cannot be easily calculated: (for pain and suffering).
3) Punitive Damages: designed to punish defendant rather than compensate victim.
What are the two limitations on availability of damages?
1) Mitigation
2) Reasonable Foreseeability
Mitigation
Victim must mitigate loss. Must take all reasonable steps to minimize the loss.
Reasonable Foreseeability
Damages must be reasonably foreseeable at time contract entered into. Unexpected losses that are too remote cannot be claimed.
When are equitable remedies available?
- damages not sufficient.
- no wrongdoers by plaintiff
- no innocent third party affected.
What are the four types of equitable remedies?
1) Accounting of Profits
Quantum Meruit
Specific Performance
4) Injunction
Accounting of Profits
Requires the defendant to disclose financial records and surrender profits to plaintiff.
Quantum Eruit
Court may provide plaintiff with reasonable value of what plaintiff has done for the defendant. Usually calculated in terms of the market price or value of the services.
