Lecture 8 Flashcards
define discharge of conduct
to discharge a contract means “to cancel the obligations of the contract, or to make the agreement or contract null/inoperative”
what are the 5 ways to discharge a contract?
1) agreement
2) performance
3) impossibility
4) operation of law
5) Breach of contract
what makes up an agreement to discharge a contract?
1) Waiver: giving up
2) proviso: condition attached to an agreement
3) substitution: revise and make a new contract - Novation
what makes up performance being part of discharging a contract?
-both parties are unable to perform the contract but are unable to make because of external events that make it not possible (frustration contract{)
what is part of impossibility?
- something happens beyond control between the parties
- frustration (force majeure)
- act of God
what makes up operation of law
- Direct sellers act
- limitations of actions act
- bankruptcy
what is the direct sellers act?
10 day cool off period, 10 days to cancel the contract
what is the limitations of action act?
-you cannot sit on your rights forever
what are the 2 components of the bankruptcy and insolvency act?
1) bankruptcy
2) proposal
what are the 2 objectives of bankruptcy law?
1) providing an orderly (fair) distribution of a debtors assets among the creditors
2) to provide an honest but unfortunate debtor to get through the legal process of bankruptcy an opportunity to start over by wiping out most of his debts (start fresh)
what are the 3 classes of creditors?
1) secured
2) preferred
3) general
what are secured creditors?
does not look to the individual to pay him looks to the assets to pay debts
what are preferred creditors?
employees entitled to pay 6 months as preferred creditors up to $2000 (government agencies, workers, compensation, landlord, funeral services, trustee in bankruptcy)
what are general creditors?
if anything is left over (rare), is is distributed on a pro rata basis (e.g. 10% out of $4000 you will get 4 cents on the dollar)
When is a person insolvent?
- if they cannot pay their bills
- if a persons debt exceeds the assets by at least $1,000 that person is deemed to be insolvent
- if they haven’t entered the legally into bankruptcy, they are insolvent
What are the ways to enter bankruptcy?
- file for bankruptcy (voluntary assignment)
- petition in bankruptcy (creditors make application to court to force you into bankruptcy)
what is the act of bankruptcy
1) can’t pay your bills
2) fail to pay bills
3) fradulent transfer
4) taking money and fleeing the country
5) hiding assets
what are some bankruptcy offences?
- criminal offences
- any fraudlent transfers is not only a lot of bankruptcy but also a bankruptcy offence
- lying to trustee is an offence
- the fines are $10,000 and/or prison up to 3 years
what is the farm debt mediation act?
- farmers cannot be petitioned into bankruptcy
- farmers can file themselves if they choose to for bankruptcy
- farmers cannot file for bankruptcy but instead have their own statute
- only applies to farmers that cannot pay their debts
What is the company creditors arrangement act?
for corporations who have outstanding issues, and owe over $5,000,000 dollars
- this act stops any lawsuits and gives them time to make plans to reorganize the company
- if most creditors approve reorganization then court will approve it
what are some ways companies reorganize?
1) obtain financing
2) reorganize itself internally
3) restructure the entire organization
what is a discharge of bankruptcy?
between 3-12 months the person can apply for discharge in bankruptcy (it will discharge most contracts, discharge most debt, there are certain exceptions, not money owing or spousal or child support,, not any fines imposed by the court){
what are some breaches of a contract?
1) Anticipatory breach
2) simple failure to perform
what is an anticipatory breach?
time for the performance of contract has not arrived and you let know ahead of time that they will not go through with it
