Chapter 18 Performance and Discharge

A party may be _______ from a valid contract contract by:

1) complete or substantial performance

2) material breach by the other party

3) A condition occurring or not occurring

4) Agreement of the parties

5) Operation of law.

Discharged

Conditions Precedent

A condition that must be fulfilled before a party's performance can be required. and absolute duty to perform.

ex: An employment offer is contingent upon the applicant passing a background check or drug test.

Conditions Subsequent

A condition which operates to terminate a party absolute promise to perform.

ex: A contract states that employment is terminated if an employee fails to obtain a required certification within 6 months of hiring

Conditions Concurrent

the party's duty to perform requires that each party perform for the other at the same time.

Ex: "I will wash the dog, provided you clean the room" (if done together).

tender

_____ is an unconditional offer to perform by a person who is ready, wiling and able to do so.

_____ ______ are provided for by the parties' agreement. "if" "provided" "after"

Expressed Conditions

What is this an example of

Clause in auto insurance policy that states if insured is involved in a accident, the insured must cooperate with the insurance company. Cooperation is a condition precedent to coverage

Expressed conditions

T or F

The contract comes to an end when both parties fulfill their respective duties by performing the acts they have promised

True

Types of Discharge by performance

Complete Performance

Conditions expressly stated in contract are completely performed.

Types of Discharge by Performance

substantial performance (minor breach)

The non-breaching party may recover damages caused by the breach

Types of Discharge by Performance

Reasonable Person Standard

Contract need only to be performed to the satisfaction of a reasonable perosn unless expressly stated otherwise

Types of Discharge by Performance

Subjective satisfaction

Subject matte is personal in nature, contract to be performed to the satisfaction of one of the parties must satisfy that party

Types of Discharge by Performance

Reasonable person standard

Applies to most contract unless contract explicitly states third party approval with superior knowledge or training in the subject matter is required, i.e., supervising engineer.

Material breach

occurs when performance not at least substantial (a failure of consideration). (major)

non-material breach (minor)

The duty to perform is not excused. Duty to perform is suspended until minor breach is cured.

T or F

Any breach entitles the nonbreaching party to sue for damages

True

T or F

Contract need only to be performed to the satisfaction of a reasonable person unless expressly stated otherwise

True

Subjective satisfaction

Subject matter is personal in nature, contract to be performed to the satisfaction of one of the parties must satisfy that party

T or F

In a non-material breach, the duty to perform is excused

False

T or F

Any breach entitles the nonbreaching party to sue for damages

True

T or F

Allows a contract to go forward if there are only minor problems

True

_____ _______ occurs when a party to a contract unequivocally communicates, before their performance is due, that they will not perform their obligation. Results in material breach, and nonbreaching party could contract with someone else.

Anticipatory repudiation

Discharge by rescission

any contract can be discharged by agreement of the parties.

For _____ _____, parties must make another agreement that also satisfies all legal requirement of a contract

Mutual rescission

Discharge by ______ occurs when both parties to a contract agree to substitute a 3rd party for one of the original parties.

Novation

T or F

Discharge by compromise or settlement, new contract w 3rd party

False

Discharge by operation of Law

Material Alteration of the Contract

When other party has materially altered a written contract without consent.

Discharge by operation of Law

Bankruptcy

a federal legal process allowing individuals or businesses unable to pay debts to eliminate them or create a repayment plan.

Discharge by operation of Law

Impossibility of performance

After a contract has been formed, supervening event (such as a fire) may make performance impossible in an objective sense.

T or F

according to temporary impossibility, does excuse performance

false

Eagle construction contracts with Flo to build a store. The work is to begin on May 1 and be done by November 1, so that Flo can open for the holiday buying season. Eagle does not finish until November 15. Flo opens but, due to the delay, losses some sales. Is Flo’s duty to pay for the construction of the store discharged?

No, Flo's duty to pay for the construction is not discharged. Eagle substantially performed by building the store, Flow remain obligated to pay the contract price. However, there is a minor breach of contract

Ready Foods contracts to buy from Speedy Distributors 200 carloads of frozen pizzas. Before Ready or Speedy starts performing, can they call off the deal? What if Speedy has already shipped the pizzas?

Yes, both parties can call off the deal before performance begins through mutual rescission.

Remington and Brandt agree to go into the house painting business together as Rem, Brandt & Company. They agree that the business will begin when they raise $10,000 in capital to buy supplies. What happens if they can’t raise the money?

Terminated, this a condition proceeding contract.

C&D Services Contracts with Ace Concessions, Inc. to service Ace’s vending machines. Later C&D wants Dean Vending Services to assume its duties under a new contract. Ace consents. What type of agreement is this? Are Ace’s obligations discharged? Why or why not?

This novation. Ace's obligation are discharged. New party takes place of an original party, extinguishing the old contract.

implied conditions

similar to expressed conditions understood to be part of contract, but not found in expressed language.