Performance and excuse of nonperformance

Question 1

Performance at common law

Answer 1

a party’s basic duty at Common law is to substantially perform all that is called for in the contract. Doesn’t have to be perfect, just meet the contract’s essential purpose.

Question 2

Performance under Art 2

Answer 2

Article 2 generally requires a perfect tender: the delivery and condition of the goods must be exactly as promised in the contract.

Question 3

Performance under Art 2 - obligation of good faith

Answer 3

Article 2 requires all parties to act in good faith, which is defined as: honesty in fact in the observance of reasonable commercial standards of fair dealing. This obligation cannot be waived by the parties. 

Question 4

Performance under Art 2 - seller’s obligation of tender and delivery - noncarrier cases

Answer 4

A non-carrier case is a sale in which it appears that the parties did not intend that the goods be moved by carrier.

Tender of delivery: the seller must put and hold conforming goods at the buyer’s disposition for a time sufficient for the buyer to take possession. The seller must give the buyer notice reasonably necessary to enable the buyer to take possession of the goods. The tender must be at a reasonable hour.

Place of delivery: in the absence of an agreement otherwise, the place of delivery generally is the seller’s place of business or if he has none his residence.

Question 5

Performance under Art 2 - seller’s obligation of tender and delivery - carrier cases - shipment contracts

Answer 5

In the absence of an agreement otherwise, the seller need not see that the goods reach the buyer, but need only:

1) Put the goods into the hands of a reasonable carrier and make a reasonable contract for their transportation to the buyer

2) Obtain and promptly tender any documents required by the contract or usage of trade or otherwise necessary to enable the buyer to take possession

And

3) Promptly notify the buyer of the shipment

Question 6

Performance under Art 2 - seller’s obligation of tender and delivery - carrier cases - destination contracts

Answer 6

If the contract requires the seller to tender delivery of the goods at a particular destination, the seller must, at the destination, put and hold conforming goods at the buyer’s disposition. 

Question 7

Performance under Art 2 - buyer’s obligation to pay - delivery and payment concurrent condition

Answer 7

In non-carrier cases, unless the contract provides otherwise, a sale is for cash, and the price is due concurrently with a tender of delivery.

However, unless otherwise agreed, when goods are shipped by carrier, the price is due only at the time and place at which the buyer receives the goods.

Therefore, in a shipment case, the price is due when the goods are put in the hands of the carrier, and in a destination contract, the price is due when the goods reach the named destination.

Question 8

Performance under Art 2 - buyer’s obligation to pay - installment contracts

Answer 8

In an installment contract, the seller may demand payment for each installment, if the price can be so apportioned, unless a contrary intent appears 

Question 9

Performance under Art 2 - buyer’s obligation to pay - buyer’s right of inspection

Answer 9

The buyer has a right to inspect the goods before they pay unless the contract provides for payment COD or otherwise indicates that the buyer has promised to pay without inspecting the goods. 

Question 10

Performance under Art 2 - buyer’s obligation to pay - payment by check

Answer 10

Tender of payment by check is sufficient unless the seller demands cash and gives the buyer time to get it. If a check is given, the buyer’s duty to pay is suspended until the check is either paid or dishonored. If the check is paid, the buyer’s duty to pay is discharged. If the check is dishonored, the seller may sue for the price to recover the goods.

Question 11

Conditions - generally

Answer 11

The contract may provide that a party does not have a duty to perform unless some condition is fulfilled. In that case, the party’s failure to perform is justified if the condition was not fulfilled.

Question 12

Conditions - distinction between promise and condition

Answer 12

A person is bound if there has been an offer acceptance and exchange of consideration. However, the contract may provide impliedly or explicitly that a party who is bound does not have a duty to perform, unless or until some specified condition occurs.

Promise: a commitment to do or refrain from doing something. If a promise is unconditional, the failure to perform according to its terms is a breach of contract.

Condition: normally means either: 1) an event or state of the world that must occur or fail to occur before a party has a duty to perform or 2) an event or state of the world, the occurrence or nonoccurrence of which releases a party from their duty to perform. Condition is a promise modifier. There can be no breach of promise until the promisor is under an immediate duty to perform.

Question 13

Conditions - failure of condition vs. breach of contract

Answer 13

The failure of a contractual provision that is only a condition is not a breach of contract, but it discharges, the liability of a promisor whose obligations on the conditional promise never mature.

Question 14

Conditions - interpretation of provision as promise or condition

Answer 14

What determines whether a contract provision is a promise or a condition is the ‘intent of the parties’. Courts will look at the words and phrases used by the parties, their prior practices, the custom in the business community with respect to the provision, and whether performance is needed from a third party. In doubtful situations, most courts will hold the provision in question is a promise.

Ex. A common situation where the contract states that a subcontractor will get paid when the general contractor is paid by the landowner is not considered a condition, and the general contractor must pay the subcontractor within a reasonable time. But look for words such as provided, if (instead of promise, or agree)

Question 15

Conditions - express conditions - generally

Answer 15

An express condition normally refers to an explicit contractual provision. It is an expressed statement in the contract, providing that either 1) a party does not have a duty to perform unless some event occurs or fails to occur; or 2) if some event occurs or fails to occur, the obligation of a party to perform one or more of his studies under the contract is suspended or terminated. Conditions of satisfaction are common express conditions.

Express conditions must be strictly complied with. There is no substantial performance rule for express conditions.

Question 16

Conditions - express conditions - promisor’s satisfaction as condition precedent - generally

Answer 16

Many contracts included an express condition that the party will pay only if satisfied with the other party’s performance. Because it is a condition, the promisor is under no duty to pay unless they are satisfied. 

Question 17

Conditions - express conditions - promisor’s satisfaction as condition precedent - mechanical fitness, utility, or marketability

Answer 17

In contracts involving mechanical fitness, utility, or marketability, a condition of satisfaction is fulfilled by a performance that would satisfy a reasonable person. It is, therefore, immaterial that the promisor was not personally satisfied if a reasonable person would have accepted and approved the performance tendered. 

Question 18

Conditions - express conditions - promisor’s satisfaction as condition precedent - personal taste or judgment

Answer 18

If the contract involves personal taste or personal judgment, for example, portraits or dental work, a condition of satisfaction is fulfilled only if the promisor is personally satisfied. Even if a condition requires personal satisfaction, a promise or lack of satisfaction must be honest and in good faith. Thus, if the promisor refuses to examine the promisee’s performance, or otherwise rejects the performance in bad faith, the condition of satisfaction will be excused. 

Question 19

Conditions - express conditions - satisfaction of 3rd person as condition

Answer 19

Construction contracts often include a condition requiring the satisfaction of the owner’s architect or engineer. When the satisfaction of a third person is a condition, most courts require the actual personal satisfaction of that person. However, the condition will be excused if the third person’s dissatisfaction is not honest and in good faith.

Question 20

Conditions - express conditions - when purpose of condition is to benefit one party

Answer 20

When it is clear that the purpose of the condition is to protect or benefit only one of the parties, the other party’s duty will not be subject to the condition.

Question 21

Conditions - classification of conditions - condition precedent

Answer 21

A condition precedent is one that must occur before an absolute duty of immediate performance arises in the other party. Most common on the bar.

Question 22

Conditions - classification of conditions - condition concurrent

Answer 22

Conditions concurrent are those that are capable of occurring together, and that the parties are bound to perform at the same time, for example, tender of the deed for cash. Thus, in effect, each is a condition precedent to the other.

Question 23

Conditions - classification of conditions - condition subsequent

Answer 23

A condition subsequent is one that, when it occurs, cut off an already existing absolute duty of performance.

Question 24

Conditions - constructive (implied) conditions - constructive conditions of cooperation and notice

Answer 24

The most important and common implied condition is that the duty of each party to render performances conditioned on the other party either rendering their performance or making a tender of their performance 

Question 25

Conditions - constructive (implied) conditions - constructive conditions of performance

Answer 25

Constructive conditions of cooperation and notice are common. Under a constructive condition of cooperation, the obligation of one party to render performance is impliedly conditioned on the other party’s cooperation in that performance. Also, it’s often a condition to one party’s performance that the other party give notice that the performance is due. A condition of notice is most commonly applied where a party couldn’t reasonably be expected to know a fact that triggered the duty to perform unless notice was given.

Question 26

Conditions - constructive (implied) conditions - order of performance

Answer 26

The courts sometimes imply constructive conditions relating to the time for performing under the contract.

Question 27

Conditions - constructive (implied) conditions - order of performance - simultaneous performance possible

Answer 27

If both performances can be rendered at the same time, they are constructively concurrent. Thus, each is a condition proceeded to the other. So, absent excuse, each party must first tender their own performance if they wish to put the other under a duty of immediate performance that would result in breach if they failed to perform.

Question 28

Conditions - constructive (implied) conditions - order of performance - one performance takes time

Answer 28

If one performance will take a period of time to complete while the other can be rendered in an instant, completion of the longer performance is a constructive condition procedent to execution of the shorter performance.

Question 29

Conditions - effect of condition - equitable remedy

Answer 29

If a contract is not enforceable due to the failure or occurrence of a condition, and one of the parties has fully or partially performed, they can usually recover under unjust enrichment theories, although the measure of damages and that case may be less advantageous than the contract price.

Question 30

Conditions - have the conditions been excused? - generally

Answer 30

A duty of immediate performance with respect to a conditional promise doesn’t become absolute until the conditions have been performed or legally excused. In analyzing a question, if the facts don’t reveal performance of the applicable condition, procedent or concurrent, look to see whether the condition has been excused. Excuse of conditions can arise in a variety of ways.

Ask who is protected by the condition and did they do anything to forfeit that protection. 

Question 31

Conditions - have the conditions been excused? - excuse of condition by hindrance or failure to cooperate

Answer 31

If a party having a duty of performance that is subject to a condition prevents the condition from occurring, the condition will be excused if the prevention is wrongful, meaning the other party would not have reasonably contemplated or assumed the risk of this type of conduct. 

Question 32

Conditions - have the conditions been excused? - excuse of condition by waiver or estoppel - generally

Answer 32

One having the benefit of a condition under a contract may indicate by words or conduct that they will not insist on the conditions being met. Consideration is not required for a valid waiver of condition.

Question 33

Conditions - have the conditions been excused? - excuse of condition by waiver or estoppel - estoppel waiver

Answer 33

Whenever a party indicates they are waving a condition before it is to happen, or they are waving some performance before it is to be rendered, and the person addressed detrimentally relies on the waiver, the courts will hold this to be a binding waiver.

Note, however, that the promise to waive a condition may be retracted at any time before the other party has changed their position to their detriment. 

Question 34

Conditions - have the conditions been excused? - excuse of condition by waiver or estoppel - election waiver

Answer 34

When a condition doesn’t occur or a duty of performance is broken, the beneficiary of the condition or duty must make an election. They may terminate their liability or continue under the contract.

If they choose to continue, they will be deemed to have waived the condition or duty. An election waiver requires neither consideration nor estoppel. Note that an election waiver cannot be withdrawn, even if the other party has not relied on it. 

Question 35

Conditions - have the conditions been excused? - excuse of condition by waiver or estoppel - conditions that may be waived

Answer 35

If no consideration is given for the waiver, the condition must be ancillary or collateral to the main subject and purpose of the contract for the waiver to be effective. In other words, you cannot waive entitlement to the entire or substantially entire return performance.

Question 36

Conditions - have the conditions been excused? - excuse of condition by waiver or estoppel - waiver in installment contracts

Answer 36

In an installment contract, if a waiver isn’t supported by consideration, the beneficiary of the waived condition can insist on strict compliance with the terms of the contract for future installments, so long as there has been no detrimental reliance on the waiver, by giving notice that he is revoking the waiver.

Question 37

Conditions - have the conditions been excused? - excuse of condition by waiver or estoppel - right to damages for failure of conditions

Answer 37

A waiver severs only the right to treat the failure of the condition as a total breach, excusing counter performance. However, the waiving party does not thereby wave her right to damages.

Question 38

Conditions - have the conditions been excused? - excuse of condition by actual breach

Answer 38

An actual breach of the contract when performance is due, will excuse the duty of counter performance. However, the counter performance will be excused it, law only if the breaches material. A minor breach may suspend this duty, but it won’t excuse it.

Question 39

Conditions - have the conditions been excused? - excuse of condition by anticipatory repudiation - generally

Answer 39

Anticipatory repudiation occurs if a promisor, prior to the time set for performance of their promise, indicates that they won’t perform when the time comes. If the requirements set for below met, this anticipatory reputation will serve to excuse conditions.

Question 40

Conditions - have the conditions been excused? - excuse of condition by anticipatory repudiation - execuroty bilateral contract requirement

Answer 40

Anticipatory repudiation applies only if there’s a bilateral contract with executory duties on both sides. 

Question 41

Conditions - have the conditions been excused? - excuse of condition by anticipatory repudiation - anticipatory repudiation must be unequivocal

Answer 41

An anticipatory repudiation stems from the words or conduct of the promises or unequivocally, indicating that he cannot or will not perform when the time comes. 

Question 42

Conditions - have the conditions been excused? - excuse of condition by anticipatory repudiation - effect of AR

Answer 42

The non-repudiating party has four alternatives in the case of an anticipatory repudiation:

Treaty anticipatory repudiation as a total repudiation and sue immediately

Suspend their own performance and wait to sue until the performance date

Treat the repudiation as an offer to rescind and treat the contract as discharged

Ignore the reputation and urge the promissory to perform. But note that by urging the promisor to perform, the non-repudiating part is not waiving the repudiation, they can still sue for breach and her excuse from performing unless the promisor retracts the repudiation.

Question 43

Conditions - have the conditions been excused? - excuse of condition by anticipatory repudiation - retration of repudiation

Answer 43

Our repudiating party may at any time before their next performance is due withdraw the repudiation, unless the other party has canceled, material change their position and reliant on the repudiation, or otherwise indicated that they consider the repudiation final. Withdrawal of the reputation may be in any manner that clearly indicates the intention to perform, but must include any assurances justifiably demanded.

Question 44

Conditions - have the conditions been excused? - excuse of condition by prospective inability or unwillingness to perform

Answer 44

Perspective failure of condition occurs when a party has reasonable grounds to believe that the other party will be unable or unwilling to perform when performance is due.

Question 45

Conditions - have the conditions been excused? - excuse of condition by prospective inability or unwillingness to perform - distinguish from actual and AR

Answer 45

Perspective, inability, or unwillingness to perform is not an anticipatory repudiation because such a reputation must be unequivocal, whereas perspective failure to perform involves conduct or words that merely raised doubts that the party will perform.

Question 46

Conditions - have the conditions been excused? - excuse of condition by prospective inability or unwillingness to perform - effect of prospective failure

Answer 46

The effect of the prospective failure is to allow the innocent party to suspend further performance on their side until they receive adequate assurances. That performance will be forthcoming. If the other party fails to provide adequate assurances, the innocent party may be excused from their own performance and may treat the failure to provide assurances as a repudiation.

Question 47

Conditions - have the conditions been excused? - excuse of condition by prospective inability or unwillingness to perform - retraction of repudiation

Answer 47

As within anticipatory repudiation, retraction as possible, if the defaulting party regain their ability or willingness to perform. However, this fact must be communicated to the innocent party in order to be effective.

Question 48

Conditions - have the conditions been excused? - excuse of condition by substantial performance - generally

Answer 48

Generally, the condition of complete performance may be excused if the party has rendered substantial performance. In this case, the other parties duty of counter performance becomes absolute. It should be noted however, that courts generally apply the doctor only if constructive or implied condition is involved, they won’t apply it when there is an express condition for fear that this would defeat the express intent of the parties.

Question 49

Conditions - have the conditions been excused? - excuse of condition by substantial performance - substantial performance arises if breach is minor

Answer 49

The rules of determining substantiality of performance are the same as those for determining materiality of breach. 

Question 50

Conditions - have the conditions been excused? - excuse of condition by substantial performance - inapplicable where breach is “willful”

Answer 50

Most courts won’t apply the substantial performance doctrine if the breach was willful.

Question 51

Conditions - have the conditions been excused? - excuse of condition by substantial performance - damages offset

Answer 51

Even though the party who has substantially performed is able to enforce the contract, the other party will be able to mitigate by deducting damages suffered due to the first parties in complete performance.

Question 52

Conditions - have the conditions been excused? - excuse of condition by substantial performance - generally inapplicable to contracts for the sale of goods

Answer 52

The doctrine of substantial performance doesn’t apply to contracts for the sale of goods because perfect tender is generally required.

Question 53

Conditions - have the conditions been excused? - excuse of condition by “divisibility” of contract - generally

Answer 53

If a contract is divisible and a party performs one of the units of the contract, they are entitled to the agreed on equivalent for that unit, even if they failed to perform the other units. It isn’t a condition proceeded to the other parties liability that the whole contract be performed. However, the other party has a cause of action for failure to perform the other units and may withhold their counter performance for those units.

Question 54

Conditions - have the conditions been excused? - excuse of condition by “divisibility” of contract - what is a divisible contract?

Answer 54

Three tests must be concurrently, satisfied to make a contract divisible:

The performance of each party is divided into two or more parts under the contract

The number of parts due from each party is the same

The performance of each part by one party is agreed on as the equivalent of the corresponding part from the other party, meaning each performance is the quid pro quo of the other.

If you see a common law contract that contains a price per unit immediately think divisibility. Usually, a statement in a contract that payment is to be made only on completion of all the units is construed as merely stating a time for payment rather than a condition making the contract invisible. divisibility is a question of contract interpretation and the underlying consideration is fairness. 

Question 55

Conditions - have the conditions been excused? - excuse of condition by “divisibility” of contract - sale of goods - installment contracts

Answer 55

Like the common law, article 2 assumes that a contract is not a visible, unless it authorizes deliveries and several lots in which case the contract is called an installment contract. In installment contracts, the price if it can be a portioned, may be demanded for each lot unless a contrary, intent appears.

Question 56

Conditions - have the conditions been excused? - excuse of condition by impossibility, impracticability or frustration

Answer 56

Conditions may be excused by impossibility, impracticability or frustration. More in depth cards later.

Question 57

Discharge of duty to perform - discharge by performance or tender of performance

Answer 57

The most obvious way to discharge a contractual duty of course by full and complete performance. Good faith, tender performance made in accordance with contractual terms will also discharge contractual duties.

Question 58

Discharge of duty to perform - discharge by occurrence of condition subsequent

Answer 58

The occurrence of the condition subsequent will serve to discharge contractual duties.

Question 59

Discharge of duty to perform - discharge by illegality

Answer 59

If the subject matter of the contract has become illegal due to a subsequently enacted law or other governmental act, the performance will be discharged. This is often referred to a supervening illegality. If the illegality existed at the time the agreement was made, no contract was formed because of the illegality. 

Question 60

Discharge of duty to perform - discharge by rescission

Answer 60

Precision will serve to discharge contractual duties. Precision may either be mutual or unilateral.

Question 61

Discharge of duty to perform - discharge by rescission - mutual rescission

Answer 61

The contract may be discharged by an express agreement between the parties to resent. The agreement to resend is itself a binding contract, supported by consideration, namely, the giving up by each party of their right to counter performance from the other.

Although mutual rescission generally discharges, the parties to a contract, watch out for a third-party beneficiary case. If the rights of a third-party beneficiary have already vested, the contract cannot be discharged by mutual rescission by the promisor and promisee

Question 62

Discharge of duty to perform - discharge by rescission - mutual rescission - executory

Answer 62

For a contract to be effectively discharged by rescission, the duties must be executory on both sides

Question 63

Discharge of duty to perform - discharge by rescission - mutual rescission - unilateral contracts

Answer 63

If the contract is unilateral, meaning, only one party owes an absolute duty, the contractor mutually rescinded where one party still has a duty to perform will be in effective. For an effective precision in a unilateral contract situation where the offer has already performed, the precision promise must be supported by one of the following:

An offer of new consideration by the non-performing party

Elements of promissory, meaning detrimental, reliance

Manifestation of intent by the original offering to make a gift of the obligation owed them

Question 64

Discharge of duty to perform - discharge by rescission - mutual rescission - partially performed bilateral contracts

Answer 64

A mutual agreement to resend will usually be enforced when a bilateral contract has been partially performed. Whether the party who has partially performed will be entitled to compensation, depends on the terms of the rescission agreement.

Question 65

Discharge of duty to perform - discharge by rescission - mutual rescission - formalities

Answer 65

Mutual rescission may be made orally. This is so even though the contract to be rescinded expressly states that it can be rescinded only by a written document, unless the subject matter of the contract to be rescinded falls within the statute of frauds or the contract is for the sale of goods.

Question 66

Discharge of duty to perform - discharge by rescission - mutual rescission - contracts involving third party beneficiary rights

Answer 66

If the rights of a third-party beneficiary have already invested, the contract may not be discharged by mutual recision.

Question 67

Discharge of duty to perform - discharge by rescission - unilateral rescission

Answer 67

Do you know lateral rescission results when one of the parties to the contract desires to resend but the other party desires that the contract be performed according to its terms. For unilateral rescission to be granted, the party desiring rescission must have adequate legal grounds. Most common among these are mistake, misrepresentation, depress, and failure of consideration. If the non-party refuses to voluntarily grant recision, the other party may file an action in equity to obtain it. 

Question 68

Discharge of duty to perform - partial discharge by modification of contract

Answer 68

If a contract is subsequently modified by the parties, this will serve discharge those terms of the original contract that are the subject of the modification. It will not serve to discharge the entire contract.

Like the original agreement, and agreement modifying, the contract requires mutual assistant and consideration. Courts usually find consideration to be present because each party has limited their right to enforce the original contract as is. No consideration is needed for the modification of a contract for the sale of goods under article 2 as long as the modification is sought in good faith.

Question 69

Discharge of duty to perform - discharge by cancellation

Answer 69

The distraction or surrender of a written contract, will not usually by itself discharge the contract. If however, the parties manifest their intend to have these acts serve as a discharge, it will usually have this effect if consideration or one of its alternatives is present. 

Question 70

Discharge of duty to perform - discharge by release

Answer 70

Release and or contract not to sue will serve to discharge contractual duties. The release or contract not to sue usually must be in writing and supported by new consideration or promissory estoppel elements.

Question 71

Discharge of duty to perform - discharge by substituted contract

Answer 71

The contract may be discharged by a substituted contract. This occurs when the parties to a contract enter into a second contract that immediately revokes the first contract, expressly or impliedly

Question 72

Discharge of duty to perform - discharge by substituted contract - intent governs

Answer 72

Whether a second contract will constitute a substituted contract, depends on whether the parties intend in immediate discharge or discharge only after performance of the second contract. If an immediate discharges intended, there is a substitute contract. If the parties intend the first contract to be discharged only after performance of the second contract, there is an executory accord rather than a substituted contract.

Question 73

Discharge of duty to perform - discharge by accord and satisfaction - generally

Answer 73

A contract may be discharged by an accord and satisfaction. And accord is an agreement in which one party to an existing contract, agrees to accept, in lieu of the performance that they were supposed to receive from the other party, some other different future performance.

The accord, taken alone won’t discharge the prior contract, it merely suspend the right to enforce it in accordance with the terms of the accord contract.

Satisfaction is the performance of the accord agreement. Its effect is to discharge not only the original contract, but also the accord contract as well.

Question 74

Discharge of duty to perform - discharge by accord and satisfaction - requirement of consideration

Answer 74

In general, an accord must be supported by consideration. Even if the consideration is of a lesser value than the originally bargained for consideration in the prior contract, it will be sufficient if the new consideration is a different type or if the claim is to be paid to a third-party. In addition, the majority view is that a offer to make a partial payment on an existing debt will suffice for an accord satisfaction if there is some bona fide dispute as to the underlying claim or there is otherwise some alteration, even if slight in the debtors consideration.

Question 75

Discharge of duty to perform - discharge by accord and satisfaction - requirement of consideration - checks tendered as payment in full

Answer 75

If a monetary claim is uncertain or subject to a bona fide dispute, and according satisfaction may be accomplished by a good faith, tender and acceptance of a check when that check or an accompanying document conspicuously states that the check is tendered and full satisfaction of the debt.

Question 76

Discharge of duty to perform - discharge by accord and satisfaction - breach of accord agreement before satisfaction - breach by debtor

Answer 76

If the debtor breaches in a court agreement, the creditor may suit either on the original discharged contract or for breach of the accord agreement. 

Question 77

Discharge of duty to perform - discharge by accord and satisfaction - breach of accord agreement before satisfaction - breach by creditor

Answer 77

If a predator breaches and a quarter agreement by suing on the original contract, the Jetter has two courses of action available:

1) raise the accord agreement as an equitable defense, and ask the court action to be dismissed

Or

2) wait until they are damaged meaning the creditor is successful in their action on the original contract and then bring an action at law for damages for breach of the accord contract. 

Question 78

Discharge of duty to perform - discharge by accord and satisfaction - distinguish modification

Answer 78

According and satisfaction is usually triggered by a dispute of an amount. If there is no dispute, you should be considering modification rather than an accord. Also look to see if the part is offering the accord is looking to discharge the contract. If instead, the parties intend the contract to continue, the parties are modifying the contract. 

Question 79

Discharge of duty to perform - discharge by novation

Answer 79

Innovation occurs when a new contract substitutes a new party to receive benefits and assume duties that had originally belong to one of the original parties under the terms of the old contract. A novation will serve to discharge the old contract.

The elements of innovation are: 1) previous valid contract; 2) an agreement among the parties, including the new party to the contract; 3) the immediate extinguishment of contractual duties as between the original contracting parties; and 4) a valid and enforceable new contract.

Question 80

Discharge of duty to perform - discharge by impossibility, impracticability or frustration - generally

Answer 80

The occurance of an unanticipated or extraordinary event may may contractual duties, impossible, or impractical to perform or may frustrate the purpose of the contract. With the non-occurrence of the event was a basic assumption of the parties and making the contract and neither part has expressly or implied the assumed the risk of the event occurring, contractual duties may be discharged.

Question 81

Discharge of duty to perform - discharge by impossibility - must be objective

Answer 81

For this world operate, the impossibility must be objective, that is the duties could not be performed by anyone. Subjective and possibility will not suffice meaning where the duties could be performed by someone but not the promisor.

Question 82

Discharge of duty to perform - discharge by impossibility - timing

Answer 82

The impossibility must arise after the contract has been entered into. If the facts giving rise to impossibility already exist, when the contract was formed, the question is not really one of discharge of contractual duties. Rather, it is a contract formation problem, namely, whether the contract is avoidable because of mistake. 

Question 83

Discharge of duty to perform - discharge by impossibility - effect of impossibility

Answer 83

If a contract is discharged because of impossibility, each party is excused from duties arising under the contract contract that are yet to be fulfilled. Either party may sue for rescission and receive restitution of any goods delivered, payments made, etc..

Question 84

Discharge of duty to perform - discharge by impossibility - partial impossibility

Answer 84

If the performance to be rendered under the contract becomes only partially impossible, the duty may be discharged only to that extent. The remainder of the performance may be required according to the contractual terms. This is so even though this remaining performance might involve added expense or difficulty.


Question 85

Discharge of duty to perform - discharge by impossibility - temporary impossibility

Answer 85

Temporary impossibility suspense, contractual duties. It does not discharge them. When per performance once more becomes possible, the duty springs back into existence unless the burden on the other party to the contract would be substantially, increased or different from that originally contemplated.

Question 86

Discharge of duty to perform - discharge by impossibility - part performance prior to impossibility

Answer 86

If a party partially performed before the impossibility arose, that party will have a right to recover in quasi contract at the contract rate or for the reasonable value of his performance if that is a more convenient valuation. 

Question 87

Discharge of duty to perform - discharge by impossibility - specific situations - death or physical incapacity

Answer 87

Death with the physical and capacity of the person necessary to effectuate, the contract serves to discharge it. 

If the services can be delegated, a contract is not discharged at the death or incapacity of the person who was to perform the services. Thus, if the contract was for personal services of a unique kind, the death and capacity of that person could make performance impossible, but if the services are not unique, the death, or in capacity of that person would not make the performance impossible.

Question 88

Discharge of duty to perform - discharge by impossibility - specific situations - supervening illegality

Answer 88

Supervening illegality may serve to discharge a contract. Many courts treat such supervening illegality as a form of impossibility.

Question 89

Discharge of duty to perform - discharge by impossibility - specific situations - subsequent destruction of subject matter

Answer 89

If the contract subject matter is destroyed, or the designated means for performing, the contract are destroyed, contractual duties will be discharged.

Compared to a contractors duty to construct a building, which is not discharged by the destruction of the work in progress. The contractor can still rebuild so it is not rendered impossible. However, if the destruction was not caused by the contractor, most courts will excuse the contractor for meeting the original deadline. The contractor is not obligated to anything other than the contract price.

By contrast, a contract to repair or remodel a building that is destroyed after work has become is discharged because there is nothing left to repair, and the extent the contractor has already performed. The contractor is entitled to recover and restitution for the value of the work done prior to the buildings destruction.

The rules relating to discharge because of destruction of the subject matter will not apply if the risk of loss has already passed to the buyer.

Question 90

Discharge of duty to perform - discharge by impracticability - test

Answer 90

The test were finding of impractical ability is at the party to perform has encountered:

Extreme and unreasonable, difficulty, and or expense, and

It’s not occurrence was a basic assumption of the parties

Question 91

Discharge of duty to perform - discharge by impracticability - contracts for the sale of goods

Answer 91

Article 2 generally follows the above rule for impossibility and impractical ability. If performance has become impossible or commercially impractical, the seller will be discharged to the extent of the impossibility or impractical ability.

Question 92

Discharge of duty to perform - discharge by impracticability - contracts for the sale of goods - allocation of risk

Answer 92

Generally, the seller assumes the risk of the occurrence of unforeseen events and must continue to perform. However, if it’s fair to say that the parties would not have placed on the seller, the risk of the extraordinary current, the seller will be discharged. 

Question 93

Discharge of duty to perform - discharge by impracticability - contracts for the sale of goods - events sufficient for discharge

Answer 93

Event sufficient to excuse performance include a shortage of raw materials or the inability to convert them to the sellers product because of contingencies such as war, strike, embargo or unforeseen shut down of a major supplier. Catastrophic local crop failure as opposed to a shortage is also sufficient for discharge.

However, mirror increases in, cost a sufficient for discharge unless they change the nature of the contract. There is no bright line test for determining when a rise in price changes the nature of the contract, but an increase in cost of more than 50% has been held to be insufficient. 

Question 94

Discharge of duty to perform - discharge by impracticability - contracts for the sale of goods - seller’s partial inability to perform

Answer 94

If the sellers inability to perform as a result of the unforeseen circumstances, only partial, they must allocate deliveries among their customers, and at their option, may include in the allocation regular customers not then under contract. 

Question 95

Discharge of duty to perform - discharge by frustration - generally

Answer 95

Frustration will exist if the purpose of the contract has become valueless by virtue of some supervening event not the fall of the party seeking discharge. If the purpose has been frustrated, a number of courts will discharge contractual duties. Even the performance of these duties is still possible.

Question 96

Discharge of duty to perform - discharge by frustration - elements of frustration

Answer 96

The elements necessary to establish frustration are:

There is some supervening act or event leading to the frustration

At the time of entering into the contract, the parties did not reasonably foresee the act or event occurring

The purpose of the contract has been completely or almost completely destroyed by this act or event

The purpose of the contract was realized by both parties at the time of making the contract.

For showing that a person has rented a venue for specific purpose known to the owner and a subsequent event that was not reasonably for seeable renters the purpose for renting the place moot

Question 97

Discharge of duty to perform - impossibility, impracticability, frustration - distinguish uses of defenses

Answer 97

A seller of land, goods, or services will raise in possibility or impractical ability as it defends that discharges performance. By contrast, a party who is supposed to pay usually the buyer will raise frustration of purpose as it offends discharging performance. Paying money is never impracticable.

Question 98

Discharge of duty to perform - discharge by account stated

Answer 98

An account stated is a contract between parties, whereby they agree to an amount as a final balance due from one to the other. This final balance encompasses a number of transactions between the parties and serves to merge all of these transactions by discharging all claims owed.

Question 99

Discharge of duty to perform - discharge by lapse

Answer 99

If the duties of each party is a condition concurrent to the other’s duty, it is possible that on the day set for performance, neither party is in breach and their contractual obligations lapse. If the contract states that time is of the essence, the lapse will occur immediately otherwise the contract will lapse after a reasonable time.

Question 100

Discharge of duty to perform - effect of running of SOL

Answer 100

If the statute of limitations on an action has run, it is generally held that an action for breach of contract may be barred. Note, however, the only judicial remedies are barred. The running of the statue does not discharge the duties. Who has the advantage of the statute, limitation subsequently agrees to perform, consideration will not be required.

Note the difference between a discharged by labs and the effect of the statute of limitations. Although both have to do with time and the end result may be similar, technically labs, discharges, a contract while the statute limitations merely makes it unenforceable in court.