Ch.3 - Termination of Contracts

Three ways to discharge a contract

Performance, frustration, breach

Frustration of Contract

Forces outside the contract make performance impossible

Actual Breach

Occurs at time of contract

Anticipatory Breach

Occurs before performance is due

Implied Anticipatory Breach

Party’s words or actions indicate they will not perform the contract

Express Anticipatory Breach

Party states no intention of performing contract

Two Options when Anticipatory Breach takes place

Treat contract as being discharged and sue for damages, continue until there’s an actual breach

Three Types of Damages

Liquidated, unliquidated, penalty clause

Purpose of Damages

Put both parties in the position of contract being properly performed

Liquidated Damages

Estimate of the expected loss

Penalty Clause

Unenforceable fine, parties often comply to avoid disputes

Unliquidated Damages

Court-determined amount using a basis of principles

Injunction

An order for a person to do or not do something 

Three Injunctions

Mandatory, prohibitory, asset-freezing

Exclusion Clauses

Excludes or limits a party’s liability for certain losses or breaches

Exclusion clauses must be:

Incorporated into contract by signature and notice

What does the postal rule apply to?

Acceptance only