Transcript No Slide Title

Discharge
◙ A party is discharged when she has no
more duties under a contract.
◙ Most contracts are discharged by full
performance.
◙ Sometimes the parties discharge a
contract by agreement.
◙ Rescind means that they terminate it by
mutual agreement.
Conditions
◙ A condition is an event that must occur
before a party becomes obligated under
a contract.
◙ How Conditions are Created
• Express Conditions -- No special language
is necessary to create the condition, but it
must be stated clearly somehow.
• Implied Conditions – The condition is not
stated, but is clear from the agreement.
Types of Conditions
◙ Condition Precedent
• Must occur before a duty arises.
◙ Condition Subsequent
• Must occur after the particular duty arises.
◙ Concurrent Conditions
• Certain things must occur simultaneously.
Performance
◙ Strict Performance
• Performance that is exactly what promised;
is usually not expected and failure to do so
does not cause for discharge.
◙ Substantial Performance
• A party that substantially performs its
obligations will receive the full contract
price, minus the value of any defects.
• A party that fails to perform substantially
receives nothing on the contract and will
only recover the value of the work, if any.
Personal Satisfaction Contracts
◙ A personal satisfaction contract is one
which the promisee makes a personal,
subjective evaluation of the promisor’s
performance.
• A court uses a subjective standard only if
assessing the work involves feelings, taste,
or judgment and the contract explicitly
demands personal satisfaction.
• In all other cases, a court applies an
objective standard to the decision.
Good Faith
◙ The Restatement (Second) of Contracts
§205 states: “Every contract imposes
upon each party a duty of good faith
and fair dealings in its performance and
its enforcement.”
Time of the Essence
Clauses
◙ A time of the essence clause will
generally make contract dates strictly
enforceable.
◙ Merely including a date for performance
does not make time of the essence.
Breach
◙ Material Breach
• Generally courts will discharge only if a
party committed a material breach.
◙ Anticipatory Breach
• Anticipatory breach is committed by one
party making it unmistakably clear that he
will not honor the contract.
◙ Statute of Limitations
• Will limit the time within which the injured
party may file suit.
Impossibility
◙ True Impossibility
• Something has happened making it utterly impossible to
fulfill the promise.
– Generally limited to destruction of the subject matter, death
of the promisor in a personal service contract and
subsequent illegality of the contract.
◙ Commercial Impracticability
• Some event has occurred that neither party anticipated,
making the contract extra-ordinarily difficult and unfair to
one party.
◙ Frustration of Purpose
• Some event has occurred that neither party anticipated
and the contract now has no value for one party.