Week 4: Contract law pt.2 Flashcards
Content of an argument: “types of obligations.”
3 types of performance:
1.) Obligation TO GIVE something:
ex. to pay the purchase price
ex. to deliver the goods &/or services
2.) Obligation TO DO something:
ex. to build a house
ex. to repair a damaged good
3.)Obligation TO NOT DO something:
ex. to not engage in unfair competition.
Difference on types of obligations based on expected outcome.
- Duty to achieve a specific, GUARANTEED result (minority of cases)
One is liable!
ex. duty of an attorney to appeal within the prescribed time.
ex. the seller promises to deliver goods by the 1st of march.
–>The victim has to prove that the guaranteed result was not achieved (low burden of proof) - Duty of best efforts (majority of cases)
Do one’s best (reasonable best) to achieve the INTENDED (not guaranteed) result. If not one is liable.
ex. Duty of an attorney to take reasonable care
ex. Duty of constructor when painting a house.
–>The victim has to prove that the debtor of the obligation did not act as a reasonable person, acting in the same circumstances (harder to prove).
Which kind of duty? How do we make a difference?
*Look at the surrounding circumstances.
*Not a limitative list:
–> In way which obligation is expressed in the contract.
“Is the outcome guaranteed or intended?”
–>The contractual price and the other terms of contract.
ex. strictly promised outcome will be more expensive.
—>The degree of risk normally involved in achieving the expected result.
Quality of performance:
what quality might the creditor of the obligation expect?
Where the quality of performance is neither fixed by, nor determinable from, the contract a party is bound to render a performance of a quality that is reasonable and not less than average in the circumstances.
Often determined in the contract
Quality of performance: what kind of quality is reasonable?
Example
Example:
Hotel is built next to the train station, contract only states “adequate sound isolation”. So, sufficient quality to cover the trains leaving and arriving at the station.
BUT only for that not some other circumstances that can occur. For example, if pubs are built nearby next to hotel and train station.
Price determination: can we leave it to one party?
Yes, but if the price is manifestly unreasonable, a reasonable price shall be substituted notwithstanding any contract term to the contrary.
Price determination: how do we define the price?
By both parties at the moment the contract is concluded:
*a fixed price;
*or calculation method or a reference mentioned in the contract (for example adjusted to the inflation)
However, under common law: open price contracts are valid
= parties agrees that a consideration is due, but the price is not agreed upon at the moment the consent is given.
under terms agreement
and conditioned agreement
The performance of a contract/obligation is conditional, under terms.
A ‘condition’ refers to a ‘future uncertain event’
The notion ‘terms’ refers to a ‘future event which will certainly happen. Either because a fixed date is mentioned or it refers to a certain event (e.g. when summer starts)
*SUSPENSIVE condition or condition precedent.
+There is a valid agreement
+But, performance is suspended until the event occurs
E.g., clearance from the competition authorities
*RESOLUTIVE condition or condition subsequent.
+There is a valid agreement & the contract is performed
+But, if the event occurs, the contract is terminated AUTOMATICALLY
E.g., if B loses its licence to trade
What happens if the performance of a contract is conditional, and the condition is entirely dependent of the will of the debtor?
This is NOT a valid agreement in case of a suspensive condition.
Time of performance: when do parties have to perform?
*(Period of) Time which is mentioned or determined in the contract.
*If not, within a reasonable time after the conclusion of the contract.
Time of performance: is an early performance acceptable?
It can be refused by the claimant, unless when the refusal is would be unreasonable.
Reasonable: An early performance by the debtor does not impact the claimant’s own obligation.
Time of performance: Is a partial performance acceptable?
No, the claimant can refuse partial performance.
