BUSI 3005 Chapter 9

Termination through performance

• Both parties complete their contractual obligations

• When all implied and express promises have been fulfilled

• Parties may continue to do business by means of new, continuing, and overlapping contracts

Termination through agreement

The parties are always free to voluntarily bring the contract to an end

Termination through frustration

• When an important, unforeseen event occurs that makes performance functionally impossible or illegal (e.g. sale of a building but the building burns down before the sale is complete)

• Neither side is liable to the other for breach

Termination through breach

A serious ______ can release the innocent party from continuing with the contract

Force Majeure Clause

rather than leaving it to a judge to decide if the event amounts to frustration, the parties contractually define for themselves, in advance, what events would frustrate the contract or otherwise bring it to an end.

Privity

only those who are parties to the contract can sue on it/enforce it in court

Condition

important term of the contract that, if breached, entitles the other party to both sue for damages and treat the contract as ended

Warranty

less important term that, if breached, only entitles the other party to sue for damages

Innominate

term that can be either a condition or warranty depending on whether the term was breached in a significant or insignificant way

Monetary damages for breach

are payable as long as the consequences could have been reasonably foreseen by the party who breaches, and as long as the damages are not too remote

Equitable Remedies

Special remedies that may be available where damages are an inadequate remedy for breach of contract

• Specific Performance

  • orders the party who breached to do exactly what the contract obligated

• Injunction

  • order not to engage in specified activities

• Interlocutory injunction

  • Order to refrain from doing something for a limited period of time

• Rescission

  • Contract treated as though it never happened

Duty to Mitigate

obligation to take reasonable steps to minimize the losses resulting from a breach of contract or other wrong