Term
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Definition
| The relief provided for an innocent party when the other party has breached the contract. It is the means employed to enforce a right or redress an injury |
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Term
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Definition
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Term
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Definition
| Recission and restitution, specific performance, and reformation |
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Term
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Definition
| A condition that must be fulfilled before a party’s promise becomes absolute. It precedes the absolute duty to perform |
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Term
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Definition
| Operates to terminate a party’s absolute promise to perform. If the condition occurs, the party need not perform any further (ex. – employment contract requiring maintenance of a professional license) |
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Term
| How are most contracts discharged? |
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Definition
| Most contracts are discharged, or terminated, by both parties’ performance of their duties under contract |
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Term
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Definition
| Unconditional offer to perform an obligation by a person who is ready, willing, and able to do so. A party making the tender has done everything possible to carry out the terms of the contract. If the other party then refuses to perform, the party making tender can sue for breach of contract. |
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Term
| Doctrine of Substantial Performance |
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Definition
| A party who in good faith performs substantially all the terms of a contract can enforce the contract against the other party. Good faith is required |
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Term
| When would a court uphold substantial performance? |
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Definition
| If the omission, variance, or defect in performance is unimportant and can easily be compensated by awarding damages, a court is likely to hold that the contract has been substantially performed. Because substantial performance is not perfect performance, the other party is entitled to damages to compensate for the failure to comply with the contract. |
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Term
| When is performing to the satisfaction of a party subjective and when objective? |
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Definition
| Contract performance will be evaluated objectively (performance would be to the satisfaction of a reasonable person) unless it is expressly stated otherwise. A personal service contract could include such a clause; contracts involving mechanical fitness, utility, or marketability would normally be judged objectively |
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Term
| When are contracts subject to the satisfaction of a third party? |
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Definition
| When a contract specifies that performance must satisfy a third party they are subject to that party’s approval |
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Term
| What is a material breach of a contract, and what effect does this have on the non-breacher's duty to perform? |
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Definition
| A material breach is a nonperformance of a contractual duty that is not at least substantial. The nonbreaching party is excused from the performance of contractual duties and has a cause of action to sue for damages resulting from the breach |
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Term
| If there is even a small breach of a contract, does the non-breacher have a remedy? What? |
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Definition
| If the breach is minor, the nonbreaching party’s duty to perform can sometimes be suspended until the breach has been remedied, but the duty to perform is not entirely excused. |
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Term
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Definition
| when one of the parties may refuse to perform their contractual obligations before either party to a contract has a duty to perform |
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Term
| What choice does the non-breacher have in the case of anticipatory repudiation? |
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Definition
| The nonbreacher is permitted to bring an action for damages immediately, even though the scheduled time for performance may still be in the future |
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Term
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Definition
| The process by which a contract is canceled or terminated and the parties are returned to the positions they occupied prior to forming it |
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Term
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Definition
| When both of the parties to a contract agree to substitute a third party for one of the original parties |
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Term
| Requirements for Novation |
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Definition
| 1.A previous valid obligation. 2. An agreement by all parties to a new contract. 3. The extinguishing of the old obligation. 4. A new contract that is valid. |
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Term
| How can a contract be discharged by a substituted contract? |
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Definition
| A compromise, or settlement agreement, that arises out of a genuine dispute over the obligations under an existing contract will be recognized at law. This agreement will be substituted as a new contract |
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Term
| What is an accord and satisfaction? |
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Definition
| To discharge a contract by accord and satisfaction, the parties must agree to accept performance that is different from the performance originally promised. The original obligation is suspended, and the obligor has a choice to perform the original obligation or to perform the accord |
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Term
| How are contracts discharged by law? |
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Definition
| Contracts may be discharged by law under circumstances including material alteration of the contract, the running of the statute of limitations, bankruptcy, and impossibility or impracticability of performance |
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Term
| Alteration of the Contract |
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Definition
| (Discharge by Law) Allows an innocent party to be discharged when the other party has materially altered a written contract without consent |
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Term
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Definition
| (Discharge by Law) Restrics the period during which a party can sue on a particular cause of action |
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Term
| How does emerging from bankruptcy discharge a contract? |
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Definition
| A discharge of bankruptcy will ordinarily bar enforcement of most of the debtor’s contracts by the creditors |
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Term
| Impossibility of Performance |
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Definition
| Refers to a situation where performance may become impossible in an objective sense. Objective impossibility is distinguished from subjective impossibility to asking whether it would be possible for anyone to perform on the contract, not just the obligor |
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Term
| 3 situations where Impossibility of Performance would apply |
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Definition
| 1.One of the parties to a personal contract dies or becomes incapacitated prior to performance. 2. The specific subject matter of the contract is destroyed. 3. A change in law renders performance illegal. |
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Term
| Commercial Impracticability |
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Definition
| May be invoked when the anticipated performance has become extremely difficult or costly. The added burden also must not have been foreseeable by the parties when the contract was made |
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Term
| The Doctrine of Frustration of Purpose |
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Definition
| Holds that a contract will be discharged if supervening circumstances make it impossible to attain the purpose both parties had in mind when making the contract |
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Term
| Purpose of compensatory damages |
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Definition
| To compensate the nonbreaching party for the loss of the bargain |
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Term
| Computation of compensatory damages |
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Definition
| Calculated as the difference between the value of the breaching party’s promised performance under the contract and the value of his or her actual performance |
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Term
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Definition
| expenses that are caused directly by a breach of contract, such as those incurred to obtain performance from another source |
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Term
| When specific performance cannot be ordered for a real estate contract, what is the measure of the damages? |
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Definition
| The damages are the difference between the contract price and the market price of the land |
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Term
| When the owner of property breaches a construction contract before performance begins, what can the contractor recover? |
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Definition
| The contractor can recover only the profits that would have been made on the contract |
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Term
| When the owner of property breaches a construction contract after the construction is completed, what can the contractor recover? |
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Definition
| The contractor can recover the entire contract price plus interest |
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Term
| What are consequential damages? |
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Definition
| AKA special damages -- foreseeable damages that result from a party’s breach of contract |
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Term
| The doctrine of mitigation of damages |
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Definition
| The innocent injured party is held to a duty to mitigate, or reduce, the damages that he or she suffers |
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Term
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Definition
| A provision in a contract specifying certain dollar amount to be paid in the event of a future default or breach of contract. Provides an incentive for the parties to fulfill their obligations under contract on time and defines remedies, avoiding the need for expensive and time-consuming litigation |
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Term
| What factors would a court examine to determine whether or not to enforce a liquidated damage clause? |
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Definition
| 1. When the contract was entered into, was it apparent that damages would be difficult to estimate in the event of a breach? 2. Was the amount set as damages a reasonable estimate and not excessive? |
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Term
| Recission - Purpose? When is it available? |
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Definition
| The purpose of recission is to undo, or cancel, a contract. Recission is available when fraud, mistake, duress, or failure of consideration is present |
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Term
| Restitution - Purpose? When can it be used? |
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Definition
| Restitution is an equitable remedy under which a person is restored to their original position before forming the contract by returning goods, property, or funds previously conveyed. It is used in recission |
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Term
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Definition
| Specific performance calls for the performance of the act promised in the contract |
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Term
| Why would a non-breacher like specific performance? |
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Definition
| 1. They need not worry about collecting the money damages awarded by a court. 2. They need not spend time seeking an alternative contract. 3. The performance is more valuable than the money damages. |
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Term
| When is specific performance ordered in connection with personal property? |
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Definition
| Almost never ordered in connection with personal property unless the property is so unique that it cannot be obtained by other means |
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Term
| When is specific performance ordered in connection with real property? |
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Definition
| Almost always ordered in connection with real property because every parcel of land is considered to be unique |
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Term
| Will specific performance be ordered in connection with personal service contracts? |
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Definition
| Courts normally refuse to grant specific performance of contracts because to order a party to perform personal services against his or her will amounts to a type of involuntary servitude |
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Term
| When will a court order reformation of a contract? |
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Definition
| When the parties have imperfectly expressed their agreement in writing. Reformation enables a court to modify, or rewrite, the contract to reflect the parties’ true intentions. 1. Presence of fraud or mistake. 2. Oral contracts whose terms are incorrectly transcribed. 3. Covenants not to compete if it is for a valid and legitimate purpose but the area or time restraints of the covenant are unreasonable |
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Term
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Definition
| A non-contract remedy. It is a legal theory under which an obligation is imposed in the absence of an agreement. It is often granted when one party has partially performed under a contract that is unenforceable |
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Term
| Elements of a quasi-contract case? |
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Definition
| 1. The party conferred a benefit on the other party. 2. The party conferred the benefit with the reasonable expectation of being paid. 3. The party did not act as a volunteer in conferring the benefit. 4. The party receiving the benefit would be unjustly enriched by retaining the benefit without paying for it. |
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Term
| Consequence of a waiver of a breach? |
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Definition
| The knowing relinquishment of a legal right – the right to require satisfactory and full performance. The party waiving the breach cannot take any later action on it. It extends only to the matter waived and not to the whole contract |
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Term
| The risk of waiving a breach on a later breach? |
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Definition
| That a pattern of conduct that waives a number of successive breaches will operate as a continued waiver |
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