Chapter Nine-End of Contracts

Question 1

Discharge by performance

Answer 1

When contractual obligations are discharged by satisfactory completion

Question 2

If a breach of performance is insignificant involving a warranty…

Answer 2

Other party still has to hold up their end but may receive compensation for breach (substantial performance)

Question 3

If a condition breached is significant…

Answer 3

The contract is normally considered discharged and a party is relieved of some duty to perform

Question 4

When a person has tendered performance of a contract…

Answer 4

-It counts as if the contract has been performed

Question 5

Tendering proper payment…

Answer 5

Does not extinguish the debt but relieves the debtor of the normal obligation to seek out the creditor to make payment. Once proper payment has been tendered and refused, debtor can simply wait for creditor to collect debt.

Question 6

Breach of warranty

Answer 6

Will warrant the right to sue the other party for compensation but won’t relieve other party from their obligation

Question 7

Breach of condition

Answer 7

Will usually let victim treat her obligation as ended and sue for breach (can still choose for it to be binding—> becomes breach of condition, and if non-breaching party has received a significant benefit, they cannot disregard)

Question 8

Exemption clause

Answer 8

If any ambiguity in terms, the narrower meaning will be applied. Must be brought to attention if customer especially if unusual or unique.

Question 9

Doctrine of fundamental breach

Answer 9

Put to rest, now it must be determined if a. clause applies to breach, b. If the clause was unconscionable, and c. Whether public policy dictates it should be set aside

Question 10

Repudiation occurs when…

Answer 10

One of the parties indicates to the other an intimation or intention to abandon/refuse performance of the contract

Question 11

Anticipatory breach

Answer 11

If repudiation occurs before performance is due

• victims can immediately treat contract as breached if repudiation relates to an important term of the contract
• victim can also ignore and demand performance and continue to perform, if fails, innocent party can sue for breach and party repudiating will be held responsible for damages even after repudiation
• once victim chooses it is binding

Question 12

Repudiation can be both expressed or implied by conduct?

Answer 12

Yes

Question 13

For discharge by agreement to be valid…

Answer 13

All ingredients necessary to form a contract must be present

Question 14

When discharging by agreement, if both parties have something left to do in the agreement, their agreement relieves them of….

Answer 14

Their respective obligations which is called a bilateral discharge or mutual release

Question 15

A discharge by agreement when one sided can be…

Answer 15

Non-binding due to lack of consideration, when discharge is completely one sided the person being relieved can raise the defence of promissory estoppel, can do an accord (do something extra to support the change of contract)

Question 16

When can an ongoing contract be terminated?

Answer 16

With reasonable notice

Question 17

Subject to clause

Answer 17

When a contract specifies that an event must be satisfied before parties are bound by it

Question 18

Condition subsequent

Answer 18

A term that brings the obligations of the parties to an end upon some event or condition taking place

Question 19

Force majeure clause

Answer 19

The anticipation of some catastrophic event

Question 20

Discharge by Frustration

Answer 20

When unexpected events occur making performance of the contract impossible (or if not possible the performance must just be different)

Question 21

Frustration occurs commonly with following situations:

Answer 21

1. Performance is impossible because subject matter has been destroyed or unusable
2. An event that forms the basis of a contract fails to take place
3. Acts of the government interfere with performance

Question 22

Damages for breach

Answer 22

Look forward in order to compensate

Question 23

Test for limitations on recoverable damages

Answer 23

Reasonable foreseeability test- breaching party is responsible only for those damages that at the time of entrance seem like a likely outcome if contract is breached

Question 24

Mitigation

Answer 24

Victims of breach have a duty to mitigate the damages doing what they can to keep damages as low as possible

Question 25

Acceleration clause

Answer 25

When an instalment payment is missed often the entire outstanding debt will be due and payable immediately

Question 26

Liquated damages

Answer 26

Damages that are specified in the contract usually enforced once liability has been determined

Question 27

Specific performance

Answer 27

Occurs when the court orders the defaulting party to live up to the terms of the contract only available if damages are inappropriate

Question 28

Injunction

Answer 28

Designed to prevent further injury