Business Law Chapter 18

When does a party’s contractual duty to begin performing a contract begin?

the the time the contract is formed, even if the time for performing is set at a later date

condition precedent

if the event must occur before a party’s duty to perform arises

condition subsequent

if the happening of a condition discharges an existing duty to perform

concurrent conditions

if the contract calls for the parties to perform their duties at the same time

how are express conditions created?

by oral or written statements in the contract

what words usually create express conditions in a contract?

that, if, when, while, after, and as soon as

what are the 3 basic degrees of performance?

strict, substantial, and material breach of contract

What performance must parties provide for contracts that are capable of being performed perfectly?

strict performance

Performance that falls short of complete performance in minor respects but does not deprive the promise of a material part of the consideration that was bargained for

substantial performance

What makes a party guilty of material breach?

if its performance fails to reach the degree of perfection the other party is justified in expecting under the circumstances

anticipatory repudiation/breach

if a party prior to the time for performance, indicates an intent to not perform its duties under the contract, the other party may sue for breach of contract immediately

What are the two special problem areas relating to performance?

contracts where the party agrees to perform to the personal satisfaction of another party AND construction contracts that condition the property owner’s duty to pay on the builder obtaining an architect/engineer’s certificate that the builder satisfactorily performed

when is it said that time is of the essence?

in contracts in which failure to perform on time is a material breach

what are the two traditionally accepted forms of excuse?

the performance was prevented or impossible

Prevention

a party who causes the other party’s failure to perform cannot complain about the failure

What does impossibility in the legal sense of the word mean?

it cannot be done, not i cannot do it

what are four kinds of impossibility?

incapacitating illness/death of a party; intervening illegality; destruction of a subject matter essential to performance; commercial impracticability/commercial frustration

parties who have released from their obligations under a contract are said to be what?

discharged

what are the ways a party can be discharged from contracts?

agreement, wavier, alteration, and statue of limitations

when does wavier occur?

when a party accepts incomplete performance without objection, knowing that defects in performance will not be remedied

statues of limitations

time in which a lawsuit can be brought

What is the UCC’s statue of limitations for contracts involving the sales of goods?

4 years from the time goods are tendered

what are remedies for a breach of contract intended to do?

put the injured party in the same position it would have been in if the contract had been performed

how are compensatory damages ordinarily measured?

by the loss in value of the promised performance

what is required for consequential damages to be recoverable?

the defendant had reason to foresee them at the time the contract was created

nominal damages

very small damages that the court may award the plaintiff when a technical breach of contract has occurred without causing any actual loss (typically no more than $1)

liquidated damage provisions

agreement in advance that a specific sum shall be recoverable if the contract is breached

when are the only times punitive damages are recoverable for a breach of contract?

extreme circumstances such as a willful breach of contract, wanton, or malicious.

what does the duty to mitigate mean for plaintiffs?

plaintiffs must avoid/minimize damages they suffer if they can do so without undue risk, expense, or humiliation.; they are not able to recover damages for injuries they could have easily avoided

why are equitable remedies granted?

if the legal remedies are not adequate to fully remedy a party’s injuries

what are the two most common equitable remedies?

specific performance and injunction

when do courts order specific performance?

if the subject matter of a contract is unique so that a money damage award will not adequately compensate a buyer whose seller refused to perform

when are injunctions available?

when a breach of contract threatens to produce an irreparable injury

how is a mandatory injunction different from a prohibitory injunction?

mandatory injunction orders a party to do a certain act, while prohibitory injunction orders a party to refrain from doing certain acts