Chapter 11: Discharge And Breach

Question 1

Discharge

Answer 1

When the parties are relieved of the need to fulfill any promises

Question 2

Performance

Answer 2

Parties fulfill all obligations in contract

-any deviation could be considered a breach

Question 3

Time is not of the essence

Answer 3

Party is entitled to perform late even if the contract sets a specific date

• does not remove liability of lateness
• default in contract unless explicitly states otherwise (I.e. time is of the essence)

Question 4

Debtor

Answer 4

Party that owes money

Question 5

Creditor

Answer 5

Party entitled to money

Question 6

Legal tender

Answer 6

Payment of notes (bills) and coins to a certain value

Question 7

Substantial performance

Answer 7

Performance that satisfies contract but is defective or incomplete in some way

Question 8

Entire contract

Answer 8

No part of the price is payable unless all work is done

Question 9

Option to terminate

Answer 9

Term that allows one or both parties to terminate

Question 10

Conditional subsequent

Answer 10

Agreement (contract) will be terminated if a certain event occurs

Question 11

True condition precedent

Answer 11

Contractual term that states an agreement will come into existence only if a certain event occurs

Question 12

Condition precedent

Answer 12

Contractual term that states while contract is made immediately it does not have to be performed until an action/event occurs

Question 13

Acceleration clause

Answer 13

While one action is restricted by conditional precedent the other party can accelerate another action necessary for event to happen

Question 14

Subsidiary obligations

Answer 14

Primary actions may be suspended but parties must perform subsidiary obligations immediately

Question 15

Recission

Answer 15

When fresh consideration is needed for a subsequent contract

Question 16

Accord & satisfaction

Answer 16

Party give up right to demand contractual performance in exchange for new benefit

Question 17

Novation

Answer 17

One contract is replaced with another

Question 18

Release

Answer 18

An agreement under seal to terminate a contract (substitute for consideration)

Question 19

Waiver

Answer 19

A party abandons right to insist on contractual performance

Question 20

Gratuitous promise

Answer 20

Bestowed or granted without claims, requires no consideration because is given for free

Gift

Question 21

Frustration

Answer 21

Impossible to perform/ performance would have a difficult result because of outside events

Question 22

Acknowledgement

Answer 22

An exception to the statute of limitations

-when debtor admits debt exists it restarts limitation period

Question 23

Condition term

Answer 23

Breach would subsequently deprive innocent party of the expected benefit of the contract
-remedy: discharge contract and claim damages for losses

Question 24

Warranty

Answer 24

Breach would not deprive innocent party of the expected benefit of the contract
-remedy; entitled to any damages ONLY

Question 25

Intermediate

Answer 25

Term that may or may not deprive innocent party of the expected benefit depending on the circumstances

Question 26

Defective performance

Answer 26

Party fails to properly perform an obligation that is due under contract

Question 27

Deviation

Answer 27

Transport departs from agreed upon route or manner of transport

Question 28

Self-induced impossibility

Answer 28

Impossibility caused by one party (who are therefore liable) that frustrates contract

Question 29

Anticipatory breach

Answer 29

Party indicates in advance that breach will occur

Innocent party remedies:

• wait until obligation is due and claim damages
• discharge contract and claim damages after acceptance of breach