ch.20

Question 1

What is Discharge?

Answer 1

When one or both of the contracting parties are no longer legal obligated to perform any obligations under the contract

Question 2

What circumstances result in Discharge?

Answer 2

• Occurrence or nonoccurrence of a condition
• Complete or substantial performance
• Material breach
• Mutual agreement
• Operation of law

Question 3

What is a condition?

Answer 3

An event or action that must occur before performance is required

Question 4

What type of conditions are there?

Answer 4

• condition precedent
• condition subsequent
• concurrent conditions

Question 5

Are conditions required to be in writing?

Answer 5

No, they can be either expressed or implied

Question 6

What happens if the conditions aren’t met?

Answer 6

No further obligation by the contracting parties

Question 7

Are there circumstances where law dictates parties are excused from performance?

Answer 7

Yes, at times the law states performance is discharged

Question 7

What is performance?

Answer 7

Completion of obligation(s) under the contract

Question 8

What are the types of performance?

Answer 8

• complete (all)
• substantial performance

Question 9

What is complete substantial performance?

Answer 9

• Completion of nearly all terms of agreement
• Honest effort to complete all terms
• Departure from terms of agreement not willful

Question 9

What is Anticipatory Repudiation?

Answer 9

When Party A becomes aware of facts that if true, make it impossible for Party B to perform under the contract

Question 9

Can Parties agree to discharge each other from performance?

Answer 9

Yes, parties can mutually agree that performance is discharged

Question 10

What is the effect of Anticipatory Repudiation?

Answer 10

Party A is discharged from obligations under contract and can sue Party B immediately for breach, and damages, if any

Question 10

What is the effect of Complete and Substantial Performance?

Answer 10

A party achieving either Complete or Substantial Performance has no further obligation(s) under the contract

Question 10

What is mutual recission?

Answer 10

Both parties agree to discharge each other from their mutual obligations

Question 11

When do we see anticipatory Repudiation?

Answer 11

• Often occurs when market conditions change and Party B realizes it will not be profitable
  to fulfill terms of contract
• Can occur either through express indication of intent or action inconsistent with intent
  to fulfill contract when performance due

Question 12

what is novation?

Answer 12

Original parties and a third party agree that the third party will replace an original party and the original party will be discharged

Question 12

What is a substituted contract?

Answer 12

ties agree to substitute new contract in place of original contract

Question 12

What is accord and satisfaction?

Answer 12

Parties agree that one party will perform duty differently from performance specified in original agreement; after new duty performed, the party’s duty under original contract is discharged

Question 12

What situations result in discharge by Operation of Law?

Answer 12

• Alteration of contract
• Bankruptcy
• Tolling of statute of limitations
• Impossibility of performance
• Commercial impracticability
• Frustration of purpose

Question 13

When can we sue for damages?

Answer 13

Generally, either party can sue the other for damages when a party breaches terms of
the contract

Question 14

What are the types of damages?

Answer 14

• Compensatory
• Consequential (special) damages
• Punitive damages
• Nominal damages
• Liquidated damages

Question 15

What should I consider prior to filing suit against the breaching party?

Answer 15

• Likelihood of success
• Desire/need to maintain ongoing relationship with potential defendant
• Possibility of getting better/faster resolution through alternative dispute resolution
  (ADR)
• Cost of litigation/ADR compared to value of likely remedy
• Primary goal of all business actions should be to engage in activity that puts the business
  in a better financial position

Question 15

Are there any obligations of the non breaching party?

Answer 15

In all cases, nonbreaching party must mitigate damages

Question 16

What are the other remedies?

Answer 16

• Rescission and Restitution
• Specific performance (specific enforcement)
• Injunction
• Reformation
• Quasi-contract

Question 16

Are there remedies other than damages?

Answer 16

Yes, sometimes monetary damages do not fulfill the performance obligations under the contract