discharge (excuses to performance obligations/defenses to contract enforcement)

Question 1

how can a contract get discharged? (5)

Answer 1

(1) impracticability
(2) frustration of purpose
(3) rescission
(4) release
(5) destruction/damage

Question 2

when is the defense of impracticability available?

Answer 2

• Performance becomes illegal after K is made;
• Specific subject matter of K is destroyed;
• Performing party to the K dies or becomes incapacitated (personal services K); or
• Performance becomes impracticable.

Question 3

what are the elements of impracticability?

Answer 3

• Unforeseeable event has occurred;
• Nonoccurrence of event was basic assumption on which K was made; and
• Party seeking discharge is not at fault.

Question 4

impracticability - timing

Answer 4

usually arises after K formation, but a fact making K performance impractical can
exist when K is made if the party has no reason to know of the fact

Question 5

impracticability - assumption of risk

Answer 5

impracticability defense not available to a party who assumes the risk of an event happening

Question 6

impracticability - partial impracticability

Answer 6

• Temporary impracticability only suspends duty; discharged if performance is materially
  more burdensome after impracticability ends
• If seller is able to deliver some of the goods, they must be apportioned among all of
  the buyers with whom the seller has contracted
• Buyer may refuse to accept and may cancel K

Question 7

impracticability - failure of a particular source

Answer 7

if K specifically identifies a source, and source of supply fails, performance is discharged even if other sources are available

Question 8

frustration of purpose

Answer 8

(1)Applies when unexpected events arise that destroy one party’s purpose in entering into K,
even if performance of K not rendered impossible
(2) Frustrated party entitled to rescind K without paying damages
(3) Unexpected event need not be completely unforeseeable, but must be so severe it’s not
within assumed risks inherent under K

Question 9

frustration of purpose - timing

Answer 9

can arise at the time of K if a party has no reason to know a fact exists

Question 10

rescission - in general

Answer 10

cancelling of K so as to restore parties to their positions before K was made

Question 11

how can a party rescind a K?

Answer 11

1. Parties may seek to rescind for a variety of reasons but grounds for rescission must have
   existed at the time the K was made
2. Rescission also possible by mutual agreement of the parties—surrender of rights
   under the original K is consideration for the rescission

Question 12

rescission - third-party beneficiaries

Answer 12

K not discharged by mutual rescission if third-party rights have already vested

Question 13

release - in general

Answer 13

Writing that manifests intent to discharge another party from an existing duty

Question 14

release - common law

Answer 14

release must be supported by consideration

Question 15

release - UCC

Answer 15

written waiver or renunciation signed/delivered by aggrieved party is enough (no consideration necessary)

Question 16

destruction/damage to identified goods - destruction

Answer 16

goods identified when K made are destroyed by no fault of either party before risk of loss passes to buyer; K is avoided, both parties are discharged, and neither party is in breach

Question 17

destruction/damage to identified goods - goods damaged but not destroyed

Answer 17

K avoided or buyer can choose to take goods at
reduced price without any other claim against seller

Question 18

destruction/damage to identified goods - risk of loss

Answer 18

if risk of loss has passed to buyer, K is not avoided and seller may demand performance by buyer