Chapter 14 Performance and Discharge

Question 1

What is a breach of contract?

Answer 1

A contracting party’s failure to perform an absolute duty owed under a contract

Question 2

Three types of performance

Answer 2

1) Complete performance
2) Substantial performance (minor breach)
3) Inferior performance (material breach)

Question 3

What is performance to the satisfaction of another?

Answer 3

-if its personal, then it must satisfy one party. only personal satisfaction of the party fullfills the condition.

Question 4

What is substantial performance?

Answer 4

a party who in good faith performs substantially all of the term of a contract can enforce the contract against the other party under this doctrine.

Question 5

What is qualification for substantial performance?

Answer 5

• must not vary greatly from the performance promised in the contract
• must create substantially the same benefits

Question 6

What is an exception to the performance satisfaction of another?

Answer 6

unless a court finds that the party is expressing dissatisfaction simply to avoid payment or otherwise is not acting in good fait

Question 7

What is a material breach of contract?

Answer 7

a breach is material when performance is not at least substantial.

Question 8

What are the consequences of material breach of contract?

Answer 8

if there is a material breach, the non-breaching party is excused from the performance of contractual duties and can sue for damages caused by a breach.

Question 9

What is anticipatory repudiation?

Answer 9

an assertion or action by a party indicating that he or she will not perform an obligation that the party is contractually obligated to perform at a future time.

Question 10

common occurrence of anticipatory repudiation?

Answer 10

Sharp fluctuation of market price

Question 11

Why is anticipatory repudiation treated as a material breach?

Answer 11

(1) the nonbreaching party should not be ready and willing to perform when one party isnt
(2) the nonbreaching party should have the opportunity to seek a familiar contract elsewhere and may have the duty to do so to minimize his or her loss

Question 12

breaching party in anticipatory repudiation

Answer 12

-until the nonbreaching party treats it as a breach, the breaching party can retract the A.R. by proper notice and restore the parties to their original obligations

Question 13

Discharge by agreement?

Answer 13

any contract can be discharged by agreement of the parties. the parties can even create a new contract for the express purpose of discharging the original contract

Question 14

Ways to discharge by agreement?

Answer 14

mutual rescision, novation & Accord & Satisfaction

Question 15

Mutual rescission?

Answer 15

an agreement between parties to cancel their contract, releasing the parties from further obligation under the contract. objective is to restore parties to postions they would have had if the contract had never been formed

Question 16

compliance with mutual rescission?

Answer 16

there must be legal requirements for this type of contract ( offer, acceptance, and consideration)

Question 17

Novation

Answer 17

the substitution, by agreement, of a new contract for an old one, with the rights under the old one being terminated. typically novation involves the substitution of a new person who is responsible for the contract and the removal of the original party’s rights and duties under the contract

Question 18

Example of novation?

Answer 18

You have a one year lease. You leave 4 months in. You are liable for the 8 months of rent unless you substitute a new contract with a new roommate to take over your remaining lease

Question 19

Discharge by accord and satisfaction

Answer 19

parties agree to accept performance different from the performance originally promised.

Question 20

satisfaction

Answer 20

the performance of the accord agreement. an accord and its satisfaction discharge the original contractual obligation.

Question 21

what happens once the accord is made?

Answer 21

the original obligation is merely suspended until the accord agreement is fully performed. if it is not performed, the party to whom performance is owned can bring an action on the original obligation or for breach of the accord

Question 22

example of accord & satisfaction

Answer 22

-you’re friend owes you $8,000 and you obtain a judgement against him. Later, you both agree that the judgement will be satisfied if you’re friend gives you her automobile in lieu of $8,000 cash. if you receive the car, the accord agreement is fully performed, and the 8,000 debt is discharged.

Question 23

material alteration

Answer 23

the law allows an innocent party to be discharged when one party has materially altered a written contract without the knowledge or consent of the other party.

Question 24

discharge by operation of law

Answer 24

material alteration, statues of limitations, bankruptcy , impossibility of performance

Question 25

bankruptcy

Answer 25

bankruptcy once the assets of the person in debt have been allocated, the debtor receives a discharge in bankruptcy.

Question 26

impossibility of performance

Answer 26

a doctrine under which a party to a contract is relieved of his or her duty to perform when performance becomes objectively impossible or totally impracticable (though no fault of either party).

Question 27

commercial impracticability

Answer 27

-a doctrine under which a seller may be excused from performing a contract when (1) a contingency occurs, (2) the contingency’s occurence makes performance impracticable, and (3) the nonoccurence of the contingency was a basic assumption on which the contract was made.