WEEK 11 Flashcards
(24 cards)
What are the methods of interpretation?
- Strict interpretation
- Purposive interpretation
What if no reasonable interpretation can be reached in a contract?
The court will void the contract for vagueness
What is the Parol Evidence Rule
When a contract is in written form, the court will only permit evidence in that contract
What are the exceptions to the Parol Evidence Rule?
- Argue error
- Argue not my doing
- Argue misrepresentation
- Argue that there was a collateral agreement
- Argue that there was no subsequent verbal agreement that altered the original contract
When are implied terms used?
- To fill in gaps
- What is a custom in the industry?
- Reasonable expectations of the party
What is privity of a contract
Only parties to a contract are bound by that contract and can enforce that contract
If the contract is clearly intended for the benefit of a third party, the third party may sue under the contract
What are the exceptions to a privity of contract
- Insurance acts
- Agents
- Negative Covenants on Land
- Collateral contract
What is an assignment of contract?
The right to force another party to perform a task agreed upon
What are the kinds of assignment of contracts?
- Absolute assignment
- Operation of Law
What are the requirements for absolute assignment?
- Must be absolute
- Must be in writing
- Promisor must receive notice of the assignment in writing
Difference between assignment and novation
Assignment
- Assignee acquires all the rights and obligations of the assignor from the existing contract
Novation
- New contract with the promisor and can have different terms, rights, and obligations
Explain the concept of assignment by operation of law
When you are automatically assigned all of the rights and benefits from certain situations like death and bankruptcy
However they are not required to perform the obligations or services under the contract except for debt
When can a contract be discharged
- Performance
- Agreement
- Frustration
- Law
What should a non-breaching party do to avoid arguments?
Tender (remind them that you are ready)
What are the kinds of discharge by agreement?
- By agreement
- Mutual Modification
- Novation
What are certain conditions that can discharge a contract by agreement?
- Condition Precedent
- Binding until the happening of a certain event - Condition Subsequent
- Binding t the time entered and released upon the happening of a subsequent event
What happens if one party has already performed prior to the frustrating event?
- Old common rule
- Cut your losses - Modification of old common law rule
- You can get reimbursed for part performance
What is the limitations act
You need to sue within 2 years or it is forgiven
Ways a breach of contract can happen
- Party fails to perform obligations upon agreed timeframe
- Anticipatory breach
Remedies to breach of contract
Major term
- Breach of condition
- Innocent party has the right to void the contract (voidable at the option of innocent party)
Minor term
- Warranty or substantially performed
- Sue for damages
What is the difference between tort and contract damages?
Tort
- Put back in a position as if the tort never happened
Contract
- Put back in a position as if the breach never happened and the contract was fulfilled
What are the kinds of damages in breach of contract?
- Direct damages (out of pocket expenses)
- Consequential damages ( From mitigation of damages)
- Expectation Damages (Loss in profits)
- General damages (Not quantifiable)
- Specific performance ( Performance and damages together)
How to deal with breach of contracts itself?
- Exemption clause (must have adequate notice)
- Liquidated damages (Fair estimate of damages for compensation for any contingencies)
- Mitigation (must show this action)
How can we evaluate mitigation?
Must take reasonable steps to try and reduce damages made from the breacher.
Courts look at commercially reasonable efforts
Can be used as a defense from the defendant if mitigation was not exercised
