CONTRACTUAL RIGHTS AND OBLIGATION Flashcards
Contracts can end in 3 main ways:
1. PERFORMANCE – both sides do what they promised.
-If one or both parties finish their duties under the contract, the contract is over
-If you offer to perform, but other party refuses, you’re still protected from being in breach
-If parties discharge from the contract because of second agreement –> Waiver (both sides agree to cancel) –> Substitute agreement (replacing old one) –> Settlement → Has to be consideration
Because of a term in the contract
-Right to terminate on notice?
-A condition precedent (the contract only starts if something happens first).
-A condition subsequent (the contract ends if something happens later — like an emergency).
Force Majeure Clause: If extreme events happen, either party can stop performing the contract w/o penalty
-Something unexpected and out of anyone’s control happens after the contract is made,
And that event makes it impossible to continue with the contract. (Example: building burns down before delivery.)
Self-induced frustration: (if you caused the problem, that’s NOT frustration) it’s breach of contract, only allows for frustration for things beyond anyone’s control
Explain: Effect of Frustration, Once frustration is proven:
-The contract ends from the moment of the event
-But now the court has to decide how to fairly split any losses
Explain FCA Appraoch:
Deposits are usually returned unless:
-The other party gave a benefit, or
-Incurred expenses because they relied on the contract.
-No deposit? The party who performed can still be reimbursed for benefits (but not their full costs).
Explain Sale of Goods Act (SGA) Exception
If you’re dealing with specific goods (e.g. “this exact painting”), and those goods are destroyed before delivery, the SGA applies instead of frustration laws.
Under the SGA:
-Buyer doesn’t pay.
-Seller absorbs the full loss
