Performance: excuses

Question 1

Impossibility and impracticability

Answer 1

The excuse of impracticability is available if:

(1) performance becomes illegal;
(2) the subject matter of the contract is destroyed; or
(3) the performing party dies or is incapacitated in a “special person” services contract.

Question 2

Frustration of purpose

Answer 2

Frustration of purpose is available when:

(1) Something has happened to undermine the entire reason for the creation of the contract;
(2) The event was extreme; and
(3) The risk of the event was not allocated to one of the parties.

Question 3

Rescission by mutual agreement

Answer 3

Rescission by mutual agreement is allowed as long as there is some performance remaining from each party.

Else, it would be a modification without consideration.

Question 4

Accord and satisfaction

Answer 4

Accord and satisfaction is when new performance (“accord”) excuses the initial performance obligation (“satisfaction”).

If the accord is not performed, the other side can sue on either the accord or the original obligation.

Question 5

Novation

Answer 5

Novation is when both parties agree for a substitute person to take over contractual obligations.

Question 6

Conditions precedent and subsequent

Answer 6

A condition may precede the obligation to perform (condition precedent), or a condition may discharge the duty to perform after a particular event occurs (condition subsequent).

Conditions can be either express or they can be implied in the interests of fairness.

For conditions precedent, e.g., obtaining a loan, a good-faith effort is implied into the contract for the party protected by the contract; otherwise, the contract would be illusory because the protected party would have no obligation.

Question 7

Conditions precedent: good faith

Answer 7

In contracts with a conditions precedent—e.g., performance contingent obtaining a loan—a good-faith effort is implied into the contract for the party protected by the contract.

Otherwise, the contract would be illusory because the protected party would have no obligation.

Question 8

Destruction of identified goods

Answer 8

If a contract:

• calls for the delivery of goods identified at the time the contract is made, and
• the goods are destroyed by no fault of either party
• before the risk of loss passes to the buyer,

then the contract is avoided.

Both parties are discharged; neither party must perform, and neither party has breached.

If the goods are damaged but not destroyed, then the contract is avoided, unless the buyer chooses to take the goods at a reduced price without any other claim against the seller.

Question 9

Release

Answer 9

A release is a writing that manifests intent to discharge another party from an existing duty.

For common-law contracts, the release must generally be supported by consideration to discharge the duty.

Under the UCC, however, a claim or right can be discharged in whole or in part without consideration by:

• a written waiver or renunciation
• signed and delivered by the aggrieved party.