Performance and Discharge

Question 1

Discharge

Answer 1

A party is discharged when she has no more duties under a contract.

Question 2

Discharged Contracts

Answer 2

Most contracts are discharged by full performance. Sometimes the parties discharge a contract by agreement

Question 3

Commercial Impracticability

Answer 3

Claim that you can’t be forced to rent space that was useless or buy advertising for a business that had close. (Very difficult to win)

Question 4

Condition Precedent

Answer 4

Some event had to occur before she was obligated to pay

Question 5

Condition

Answer 5

An event that must occur before a party becomes obligated under a contract. No special language needed to create the condition (“provided that” is often used though). As long as parties intended to create a condition, a court will enforce it.

Question 6

Common in All Conditional Clauses

Answer 6

If the condition does not occur, one party will probably be discharged without performing

Question 7

Condition Precedent

Answer 7

An event must occur before a duty arises. Unless and Until. Plaintiff has burden to prove condition happened

Question 8

Condition Subsequent

Answer 8

The condition must occur after the particular duty arises. Defendant who must prove that the condition occurred, relieving him of any obligation

Question 9

Concurrent Conditions

Answer 9

Both parties have a duty to perform simultaneously. Both parties agree to do something and each performance is the condition for the other’s performance.

Question 10

Strict Performance

Answer 10

A party is not generally required to render strict performance unless the contract expressly demands it and such a demand is reasonable.

Question 11

Substantial Performance

Answer 11

In a contract for services, a party that substantially performs its obligations will receive the full contract price, minus the value of any defects

Question 12

Failure to give Substantial Performance

Answer 12

Party that fails to perform substantially receives nothing on the contract itself and will only recover the value of the work, if any

Question 13

When is performance substantial?

Answer 13

How much benefit has the promisee received? If it is a construction contract, can the owner use the thing for its intended purpose? Can the promisee be compensated with money damages for any defects? Did the promisor act in good faith?

Question 14

Personal Satisfaction Contract

Answer 14

The promisee makes a personal, subjective evaluation of the promisor’s performance.

Question 15

Subjective Standard in Personal Satisfaction Contracts

Answer 15

A court applies a subjective standard only if assessing the work involves personal feelings, taste, or judgment and the contract explicitly demanded personal satisfaction. Promisee’s judgment does not have to be reasonable.

Question 16

Objective Standard

Answer 16

Standard will be used if assessing the work does not involve personal judgement or if the contract failed to explicitly demand personal satisfaction. Promisee’s judgment of the work must be reasonable

Question 17

Good Faith

Answer 17

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement. Remain faithful to the “agreed common purpose and justified expectations of the other party”

Question 18

Time is of the Essence Clause

Answer 18

A time of the essence clause will generally make contract dates strictly enforceable. Merely including a date for performance does not make time of the essence

Question 19

Breach

Answer 19

When one party breaches a contract, the other party is discharged.

Question 20

Material Breach

Answer 20

Courts will only discharge a contract if a party committed a material breach. One that substantially harms the innocent party and for which it would be hard to compensate without discharging the contract

Question 21

Anticipatory Breach

Answer 21

When one party makes it unmistakably clear that it will not honor the contract.

Question 22

Statute of Limitations

Answer 22

A statute of limitations begins to run at the time of injury and will limit the time within which the injured party may file suit

Question 23

Impossibility

Answer 23

One party seeks to discharge without fulfilling its contract obligations because it was “impossible”

Question 24

True Impossibility

Answer 24

Rare. Means that something has happened making it utterly impossible to do what the promisor said he would do.

Question 25

True Impossibility Limited to 3 Caauses

Answer 25

1. Destruction of the Subject Matter (vineyard example)
2. Death of the Promisor in a Personal Services Contract.
3. Illegality. (construction in Iran example)

Question 26

Commercial Impracticability

Answer 26

Means some event has occurred that neither party anticipated and fulfilling the contract would now be extraordinarily difficult and unfair to one party

Question 27

Frustration of Purpose

Answer 27

Means some event has occurred that neither party anticipated and the contract now has no value for one party.

Question 28

Financial Difficulties

Answer 28

Mere financial difficulties will never suffice to discharge a contract. If the promisor must use a different means to accomplish her task, at a greatly increased cost, she probably does have a valid claim of impracticability

Question 29

Force Majeure Clause

Answer 29

is significant, but not necessarily dispositive. Companies sometimes include a force majeure clause, allowing cancellation of the agreement in case of extraordinary and unexpected events.