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J - B LAW 301 > Chapter 11: Discharge and Breach > Flashcards

Chapter 11: Discharge and Breach Flashcards

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1
Q

Discharge

A

A contract is discharged when the parties are relieved of the need to do anything more under the contract.

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2
Q

What are the 4 general ways that contracts can be discharged?

A
  • Performance.
  • Agreement or intention.
  • Operation of law.
  • Breach.
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3
Q

Performance

A

Occurs when the parties fulfill all the obligations contained in the contract.

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4
Q

What is the most common way to discharge a contract?

A

Performance.

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5
Q

Time is Not of the Essence

A

Means that a part is entitled to perform late even if the contract sets a specific date.

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6
Q

Tendering

A

Offering

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7
Q

Who has the obligation to tender payment?

A

The debtor has the obligation to find the creditor to tender payment.

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8
Q

Legal Tender

A

A payment of notes (bills) and coins to a certain value.

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9
Q

The debtor must pay in exact amounts, and the creditor is not required to provide change. True or false?

A

True.

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10
Q

Why is money not a favourable means to discharge a contract?

A

It can be stolen and used, and is very difficult (if not impossible) to recover.

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11
Q

Debit Card

A

A plastic card that allows a person to debit, or withdraw, funds from a bank account.

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12
Q

Are debit transactions instantaneous?

A

No. It goes through a clearing and settlement system.

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13
Q

Is payment by debit card final?

A

Yes.

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14
Q

Countermand

A

Stop a cheque.

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15
Q

Credit Card

A

Operates by allowing the cardholder to obtain credit, or a loan, for the purpose of paying for goods or services.

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16
Q

Credit

A

The ability to enjoy value now, with a promise to pay for it later.

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17
Q

Is the cardholder or the card issuer responsible for a lost or stolen credit card?

A

Depends. If the card is kept with the PIN or if the cardholder fails to report a loss, then the cardholder is responsible. Otherwise, the card issuer is responsible.

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18
Q

How is cheque a form of conditional payment?

A
  • Can be forged.
  • Writer can issue stop payment order.
  • Can be overdrawn.
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19
Q

Damages

A

The amount of money that the court may order the defendant to pay to the plaintiff.

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20
Q

Substantial Performance

A

Generally satisfies the contract but is effective or incomplete in some minor way.

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21
Q

If a contract is discharged by substantial performance, does the innocent party have to pay for work that was not done?

A

No.

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22
Q

Entire Contract

A

Says that no part of the price is payable unless all of the work is done.

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23
Q

Can someone that did part of an entire contract claim the amount of work that they did?

A

No.

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24
Q

Option to Terminate

A

A contractual provision that allows one or both parties to discharge a contract without the agreement of the other.

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25
Q

What types of restrictions can be placed on options to terminate?

A

Having to give reasonable notice, having to compensate the other party for the losses that it suffered as a result of the early termination.

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26
Q

Condition Subsequent

A

A contractual term that states that the agreement will be terminated if a certain event occurs.

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27
Q

True Condition Precedent

A

A contractual term that states that an agreement will come into existence only if and when a certain event occurs.

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28
Q

Condition Precedent

A

A contractual term that states that while a contract is formed immediately, it does not have to be performed unless and until a certain event occurs.

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29
Q

When is the time of creation of contract for condition subsequent?

A

Immediate.

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30
Q

When is the time of creation of contract for true condition precedent?

A

If and when condition is satisfied.

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31
Q

When is the time of creation of contract for condition precedent?

A

Immediate.

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32
Q

What is the effect of the condition in condition subsequent?

A

Discharge of existing contract.

33
Q

What is the effect of the condition in true condition precedent?

A

Creation of contract.

34
Q

What is the effect of the condition in condition precedent?

A

Suspension of primary obligations.

35
Q

Executory

A

A contract is executory if a party has not fully performed its obligations.

36
Q

Executed

A

A contract is executed if a party has fully performed its obligations.

37
Q

Rescission

A

Occurs when the parties agree to bring their contract to an end.

38
Q

What is the consideration when an executory condition is rescinded?

A

Both parties give up the right to insist performance of original contract.

39
Q

Accord and Satisfaction

A

Occurs when a party gives up its right to demand contractual performance in return for some new benefit.

40
Q

Does accord and satisfaction require fresh consideration?

A

Yes.

41
Q

Release

A

An agreement under seal to discharge a contract.

42
Q

Variation

A

Involves an agreement to vary the terms of an existing contract.

43
Q

True or false? Variation requires fresh consideration on both sides of the agreement.

A

True.

44
Q

Novation

A

A process in which one contract is discharged and replaced with another.

45
Q

Novation can include a substitution of obligations or parties. True or false?

A

True.

46
Q

Can a novation occur without consent of al parties?

A

No, novation requires consent of all parties.

47
Q

When novation occurs, does the agreement to discharge the old contract need to be supported by consideration?

A

Yes.

48
Q

True or false? Novation can only be achieved expressly.

A

False, can be achieved expressly or impliedly. However, as a matter of risk management, the agreement should always be clearly written.

49
Q

Waiver

A

Occurs when a party abandons a right to insist on contractual performance.

50
Q

Does a waiver require consideration or a seal?

A

No.

51
Q

Does a waiver have to be written down?

A

No.

52
Q

What does the court require the party to prove when they obtain a waiver?

A

That the person agreeing to the waiver clearly intended to waive their rights.

53
Q

How can contracts be varied?

A
  • Accord and satisfaction.
  • Variation.
  • Novation.
  • Waiver.
54
Q

How can contracts be replaced?

A
  • Novation.
55
Q

How can contracts be terminated?

A
  • Option to terminate.
  • Condition subsequent and condition precedent.
  • Rescission.
  • Release.
56
Q

Statute of Limitations

A

Require a party who has suffered a breach of contract to sue within a certain period.

57
Q

A bankrupt debtor is discharged from outstanding contractual obligations…

A

If the bankruptcy was caused by misfortune rather than by misconduct.

58
Q

Breach

A

Occurs whenever a party does not perform precisely as promised.

59
Q

Condition

A

A term is a condition if the innocent party would be substantially deprived of the expected benefit of the contract if a breach occurred.

60
Q

Does the breach of a condition automatically discharge a contract?

A

No, the right to discharge lies with the innocent party.

61
Q

Warranty

A

A term is a warranty if the innocent party would not be substantially deprived of the expected benefit of the contract if a breach occurred.

62
Q

Terms in a contract are either ___, ___, or ___.

A

Conditions, warranties, intermediate.

63
Q

Intermediate

A

A term is intermediate if, depending upon the circumstances, the innocent party may or may not be substantially deprived of the expected benefit of the contract in the event of a breach.

64
Q

What options are open when a condition is breached?

A
  • Discharge contract and claim damages.

- Continue with contract and claim damages.

65
Q

What options are open when a warranty is breached?

A
  • Continue with contract and claim damages.
66
Q

What options are open when an intermediate term is breached?

A

Depends upon seriousness of breach:

  • Discharge contract and claim damages, or;
  • Continue with contract and claim damages.
67
Q

What are the four ways in which breach can occur?

A
  1. Defective performance.
  2. Deviation.
  3. Anticipatory breach.
  4. Self-induced impossibility.
68
Q

Defective Performance

A

Occurs when a party fails to properly perform an obligation due under a contract.

69
Q

De minimis non curat lex

A

The law does not concern itself with trifles.

70
Q

Deviation

A

Occurs when a ship, train, or truck departs from the route agreed upon by the parties.

71
Q

Anticipatory Breach

A

Occurs when a party indicates in advance, by words or conduct, that it does not intend to fulfill an obligation when it fails due under a contract.

72
Q

When is the innocent party allowed to seek relief when there is an anticipatory breach?

A

Immediately.

73
Q

What is the choice that the innocent party has to make in an anticipatory breach situation?

A
  1. Reject the breach, claim damages. and carry on with the contract.
  2. Accept the breach, claim damages, and discharge the other party from future performance.
74
Q

Self-Induced Impossibility

A

Differs from frustration in that one party caused the contract to be impossible. The innocent party can discharge the contract and claim damages.

75
Q

What is the effect of discharging a contract for breach?

A

The parties are relieved of the need to perform their primary obligations in the future.

76
Q

What is the effect of rescinding or voiding a contract?

A

It was as if the contract had never existed.

77
Q

Does discharging a contract get rid of it?

A

No.

78
Q

In what cases might an innocent party lose the right to discharge?

A
  • If the innocent party chooses to continue on with the agreement.
  • If the part in breach provided a benefit the innocent party cannot return. However, you can claim damages.

J - B LAW 301 (22 decks)

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