Unit 5: Termination and Breach of Contracts Flashcards
What are the 4 ways a contract can be terminated?
- Legal Impossibility
- Contingency
- Mutual Recession
- Terms of Lease Contract
How can a contract be terminated by legal impossibility?
If there is a duty in the contract that can’t be legally performed.
How can a contract be terminated by contingency?
If one of the contingencies cannot be met.
How can a contract be terminated by mutual recession?
If all parties agree to return to their original condition before the contract was executed.
What 2 ways of contract termination allow for earnest money to be returned?
- Contingency
2. Mutual Recession
T/F Most contracts are terminated by death.
False. Most contracts are NOT terminated by death. The deceased estate would have to honor the contract.
T/F Offers terminate upon death.
True
What is a breach of contract?
When 1 party is in default without a legal excuse.
What would happen if the seller took fixtures that were not excluded?
The seller would be in breach.
What would happen if the buyer’s earnest money was returned because of insufficient funds?
The buyer would be in breach.
What can the non-breaching party do to remedy a breach in contract?
- Acceptance of Performance
- Specific Performance
- Liquidated Damages
- Actual Damages
What does acceptance of performance mean?
Choosing not to sue.
What does specific performance mean?
Suing to force performance/for completion of the contract.
What is the only thing a buyer can do if the seller decides not to sell after the contract has been executed?
Specific Performance
How can a non-breaching party retain liquidated damages?
If liquidated damages was part of the contract.
