Chapter 10: Contract Performance, Breach, and Remedies Flashcards
When the parties have genuinely agreed to the terms of a contract they have demonstrated…
Voluntary consent
Mistake, misrepresentation, undue influence, and duress are all causes of a lack of _____
Voluntary consent
A mistake made by only 1 of the parties. This mistake does not give the mistaken party any right to relief from the contract and it is still enforceable.
Unilateral mistake
Only mistakes of _____, can allow a contract to be cancelled.
Fact
A unilateral mistake of fact normally doesn’t allow the contract to be cancelled other than what 2 exceptions?
- If the other party to the contract knows or should have known that a mistake of fact was made.
- If mistake was due to an inadvertent mathematical mistake and without gross (extreme) negligence.
A mutual misunderstanding concerning a basic assumption on which the contract was made. When both parties are mistaken about the same material fact, the contract can be rescinded by either party.
Bilateral Mistake
A mistake that concerns the future market value or quality of an object. Generally, the contract is enforceable by either party.
Mistake of Value
Can be words or actions; occurs when a party takes specific action to conceal a fact that is material to the contract.
Fraudulent Misrepresentation
Arises from relationships in which one party can greatly influence another party thus overcoming that party’s free will. This renders the contract voidable by the innocent party.
Undue Influence
When a party enters into a contract under fear or threat they are thought to be under _______. This renders the contract voidable.
Duress
To terminate one’s contractual duties.
Discharge
A qualification in a contract based on a possible future event, which will trigger the performance of a legal obligation or terminate an existing obligation under a contract.
Condition
Condition that must be fulfilled before a party’s performance can be required.
Condition Precedent
When both parties fulfill their respective duties by performing the acts they have promised.
Discharge by Performance
An unconditional offer to perform by a person who is ready, willing, and able to do so.
Tender
When parties perform exactly as agreed, or “perfect”.
Complete Performance
A party who in good faith performs substantially all of the terms, and is able to enforce the contract.
Substantial Performance
The 3 elements of substantial performance are…
- Party acted in good faith.
- Performance conferred most of the benefits promised.
- Performance did not vary greatly from what was promised.
The nonperformance of a contractual duty.
Breach of contract
In the event of a _____ ______, the duty to perform is not excused and the non-breaching party must resume performance of the contractual obligations undertaken.
Minor breach
Event that occurs when one party refuses to perform his or her contractual obligation before performance is due. This is treated as a material breach, and the other party has the ability to sue for damages.
Anticipatory Repudiation
For a ______ _______ to occur, the parties must make another agreement that also satisfies the legal requirements for a contract (offer, acceptance, and consideration).
Mutual rescission
Occurs when both of the parties to a contract agree to substitute a third party for one of the original parties.
Novation
What are the requirements for a novation? (4)
- A previous valid obligation.
- An agreement by all parties to a new contract.
- The extinguishing of the old obligation (discharge of the prior party)
- A new contract that is valid.
When one of the parties materially alters a written contract without consent. This allows the innocent party to be discharged.
Material Alteration
When an event occurs that neither party could have reasonably foreseen at the time the contract was formed, that renders the performance of the contract impossible.
Impossibility of performance
What are the (3) types of impossibility that the court will qualify as grounds for the discharge of contractual obligations.
- When one of the parties to a personal contract dies or becomes incapacitated prior to performance.
- When the specific subject matter of the contract is destroyed.
- When a change in law renders performance illegal.
When a contract is suspended until performance is possible.
Temporary impossibility
Courts can choose not to enforce a contract when performance of a contract becomes extremely difficult or costly, and not have been known by parties when contract made.
Commercial Impracticability
When an event that was no foreseeable decreases the value of what a party receives under contract and makes it impossible to attain the purpose both parties had in mind when they made the contract. The contract is then able to be discharged.
Frustration of Purpose
Damages that cover direct losses and costs
Compensatory damages
Damages that cover indirect and foreseeable losses.
Consequential damages
Damages that punish and deter wrongdoing
Punitive damages
Damages that recognize wrongdoing when no monetary loss is shown.
Nominal damages
A doctrine that states, the duty owed depends on the nature of the contract.
Mitigation of damages
Specifies that a certain dollar amount is to be paid in the event of a future default or breach of contract.
Liquidated damages
Specifies a certain amount to be paid in the event of a default or breach of contract, but is designed to penalize the breaching party, not to make the innocent party whole.
Penalty
Rescission, restitution, specific performance, and reformation are all…
Equitable remedies
The act of returning goods, property, or funds previously conveyed by the parties in a contract.
Restitution
The performance of the act promised in a contract.
Specific Performance
Remedy whereby a contract is canceled and the parties are restored to the original positions that they occupied prior to the transactions.
Rescission
Equitable remedy allowing a contract to be reformed, or rewritten, to reflect the parties’ true intentions
Reformation
When a non-breaching party may be willing to accept a defective performance of the contract.
Waiver
