Excuses

Question 1

What is an excuse?

Answer 1

A K exists, but something has happened to prevent one side from having to perform.

Question 2

What are the five types of excuses?

Answer 2

Impossibility
Impracticability
Death
Frustration of Purpose
Rescission or cancellation

Question 3

Elements of the excuse of impracticability

Answer 3

A duty may be discharged if:

• An unforeseeable event occurs (e.g., natural disaster) making the performance of the K extremely difficult,
• The nonoccurrence of the event was a basic assumption at the time of the contract, AND
• The party seeking discharge must not be at fault.

Nonextraordinary increases in cost are not sufficient for this excuse.
If the occurence of the event was foreseeable, then the party *assumed the risk.

Question 4

Impossibility Excuse

Answer 4

• performance becomes illegal after K is formed
• subject matter of K is destroyed

Question 5

Death Excuse

Answer 5

Death does not normally excuse liability on an existing K.

BUT: if it is a service K and there is something special about the person performing on the K and they die/incapacitate, then death is an excuse.

Question 6

Frustration of Purpose Excuse

Answer 6

Very rare. If an unexpected event arises and destroys that party’s purpose for entering the K, the party can rescind the K even though performance is technically still possible.

Nonoccurrence of event must have been a (1) basic assumption at time of K and (2) party seeking excuse was not at fault.

Question 7

Recsission by Mutual Agreement Excuse

Answer 7

Performance is excused because the initial K has been modified or canceled.

Both parties can agree to both walk away from a K, provided there is some performance remaining on EACH side. If one party has completed performance, then there is no consideration for the modification.

Question 8

What is an Accord and Satisfaction?

If new accord is not performed, what can other party sue on?

Answer 8

An A&S occurs when the parties to an earlier K agree that performance will be satisfied instead by the completion of a different performance.

New performance = accord
Excusal of initial performance obligation = satisfaction.

If accord is not performed, other side can sue on EITHER the original obligation OR the new promise.

Question 9

Accord & Satisfaction v Modification

Answer 9

• If the party to perform has an option to satisfy a contract obligation by doing something
  else, then it is an accord and satisfaction.
• In a modification, it is clearer that the parties have changed the performance obligation.

Question 10

What is novation? What happens to the original promisor?

Answer 10

Novation occurs when BOTH parties agree that a substitute person will take over the contractual obligations.

If there is valid novation, the original promisor is excused from performance. Cannot be sued.

Question 11

Novation v Delegation

Answer 11

Novation = both sides agree to a substitute person who will take over the contractual obligations.

Delegation = one sides asks someone else to do the work. One side cannot create a novation.