Contracts III - Discharge Flashcards
What is contract interpretation?
court decision in disputes regarding the meaning of a part of the contract
What are the 2 types of contract interpretation?
- Strict - considers the PRECISE MEANING of words
2. Liberal - considers the INTENT
What is rule of contra proferentem?
When a contract is ambiguous, it will be in favour of the recipient of the contract.
What is parol evidence rule?
Written agreement ALWAYS overrules verbal
What are the 5 ways a contract may be discharged?
- Performance
- Discharge pursuant to express terms
- Agreement to discharge
- Discharge by frustration
- Discharge by breach
What is performance discharge?
All parties have fulfilled their obligations of the contract
What is discharge by express terms?
The contract can stipulate that certain events may terminate the contract
What is agreement to discharge?
Parties agree to terminate the contract
What is discharge by frustration
Fundamental change in circumstances that hinders parties from fulfilling the contract
What is discharge by breach?
Court decided. If a party fails to meet their obligations under the contract
Contract term: condition
essential obligation to the contract
Contract term: warranty
obligation that is not essential.
Key issue in lawsuit is determining what is a condition and what is a warranty (minor term)
What is repudiation?
When one party expressly notifies the other (or indicates through conduct) that it does not intent to fulfill the obligations of the contract.
What is a remedy?
non-defaulting party is entitled to damages
What are direct damages?
The difference between the value of the performance received and the value of performance promised in the contract
What are indirect damages?
Loss of profit caused by the breach
What is duty to mitigate?
The party that received the damage must do everything they can to reduce the damage
What is quantum meruit?
Party will receive as much as is deserved even though the contract is breached
What is specific performance?
The court stipulates that a party of a contract is obligated to perform a specific task to remedy the contract dispute.
What is injunction?
Court order that prohibits party from performing an act.. Only granted when a contract contains a “negative condition”, like “won’t do X”
What is a fundamental breach?
Breach that goes to the root of the contract and deprives a party of the benefit of the contract.
