Chapter 17

Question 1

What does it mean when we say a party to a contract is “discharged”?

Answer 1

a party is discharged when she has no more duties under the contract

Question 2

What is a condition?

Answer 2

an event that must occur before a party becomes obligated under a contract

Question 3

What is a condition precedent? what happens if it doesn’t occur?

Answer 3

a condition that must occur before a duty arises. if it doesn’t occur one party may be discharged

Question 4

What is a condition subsequent and what happens if it fails to occur? Who has the burden of proving that the condition subsequent did not occur?

Answer 4

The condition must occur after the particular duty arises. If the condition does not occur, the duty is discharged. The defendant has the burden of proving

Question 5

How do concurrent conditions work? Explain.

Answer 5

Both parties have a duty to perform simultaneously. Renee agrees to sell her condominium to Tim on July 5. Renee agrees to furnich a valid deed and clear title to the property on the date, and Tim promises to present a cashier’s check for $600,000. Each performance is the condition for the other’s performance

Question 6

What does performance mean in contract law language?

Answer 6

The more complex a contract, the more certain that at least one party will perform imperfectly.

Question 7

Explain strict performance. Do courts favor strict performance clauses? Give an example of when one might be appropriate.

Answer 7

Requires one party to perform its obligations precisely, with no deviation from the contract terms. Courts do not favor strict performance.
Marshall agrees to deliver 500 sweaters to Leo’s store, and Leo promises to pay $20,000 cash on delivery. If Leo has only $19,000 and a promissory note for $1,000, he has failed to perform, and Marshall need not give him the sweaters. Leo’s payment represents 95% of what he promised, but there is a big difference between cash and IOU

Question 8

Explain Substantial performance. Why would a party in breach of a contract want to prove substantial performance on their part?

Answer 8

Occurs when one party fulfills enough of its contract obligations to warrant payment. In order to still collect on a contract

Question 9

List the four issues a court may consider in determining if a breaching party has substantially performed his/her obligation

Answer 9

• how much benefit has the promisee received?
• If it is a construction contract, can the owner use the thing for its intended purposes?
• Can the promisee be compensated with money damages for any defects?
• Did the promisor act in good faith?

Question 10

Time is of the essence clause.

Answer 10

a condition– generally make contract dates strictly enforceable

Question 11

Differentiate between a breach and a material breach by describing the consequences of each.

Answer 11

• Breach= serious but not life threatening
• Material breach= violating a condition– one that substantially harms the innocent party and for which it would be hard to compensate without dischraging the contract

Question 12

Explain anticipatory breach (called anticipatory repudiation in class) and what options the non-breaching party has upon anticipatory repudiation.

Answer 12

• Anticipatory= before the fact repudiation= breach of contract, giving someone notice of a breach before the fact
o Two options
 Treat the contract as in breach and go elsewhere
 May wait until time of performance and see if the party does in fact breach

Question 13

Explain the purpose and operation of a statute of limitations (also known as a limitation of actions).

Answer 13

• If you do not bring your lawsuit within a specified period of time (generally three years in contract law) from time of discovery
• Statute of repose= if you bring a lawsuit after this period, the lawsuit is no longer valid, even if you don’t find out until later, generally longer than statute of limitations

Question 14

List the three situations which will perhaps support a claim of impossibility.

Answer 14

1) if the subject matter of the contract has been destroyed
2) if the subject matter becomes illegal
3) if the person who was supposed to perform has died

Question 15

Explain the limitations on the doctrines of commercial impracticability and frustration of purpose. Explain the purpose of a force majeure clause from class discussion.

Answer 15

• Force majeure clause= major occurrence, something has occurred that neither party has anticipated that makes performance impossible—example= war

Question 16

If a breaching party cannot prove substantial performance, what if anything may they recover for their defective performance?

Answer 16

they will only recover the value of the work, if any

Question 17

explain how a personal satisfaction contract works

Answer 17

permit the promisee to make a subjective evaluation of the promisor’s performance

Question 18

Explain the duty of good faith and fair dealing

Answer 18

every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement