Chapter 17 BAFN
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| A party may be discharged from a valid contract by... (4) | 1) A condition occurring or not occurring.
2) Full performance or material breach by the other party.
3) Agreement of the parties.
4) Operation of law.
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| Define Rescind | means that they terminate it by mutual agreement
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| Define Condition | an event that must occur before a party becomes obligated under contract
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| Define Express Conditions | No special language is necessary to create the condition, but it must be stated clearly somehow
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| Define Implied Conditions | The condition is not stated, but is clear from the agreement
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| Define Condition Precedent | A future, uncertain event creating a duty to perform
EXAMPLE: Tisha contracts to buy a house on the condition she is able to obtain financing. The contract arises and she is obligated to purchase the house once she obtains financing
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| Define Condition Concurrent | Bryan promises to buy Stevie’s guitar for $1000. Stevie must give Bryan the guitar when Bryan gives Stevie $1000.
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| Example of Condition Subsequent | Lee agrees to work for Wool Co. until he returns to college. Lee returns to college in August and discharges his obligation under the contract.
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| A time of the essence clause will generally make | contract dates strictly enforceable
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| Statue of Limitations | Will limit the time within which the injured party may file suit
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| True or False: breach of contract gives the non-breaching party the right to sue and recover for damages caused by the breach | True
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| Standard for determining materiality is flexible, but generally based on | the amount of the breach and timing for performance
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| In an Anticipatory Breach, the promisee has these choices (3) | 1) Withhold his/her own performance and sue for damages for total breach of contract immediately
2) Wait to sue until time for performance in case the other party changes his mind and decides to perform
3) Waive his/her rights to performance
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| Define Commercial Impracticability | Some event has occurred that neither party anticipated, making the contract extra-ordinarily difficult and unfair to one party
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| Define Frustration of Purpose | Some event has occurred that neither party anticipated and the contract now has no value for one party
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| Define Accord | an agreement in which a promisee who has existing claim agrees with promisor that s/he will accept some performance different from that originally agreed on
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| Define Satisfaction | When promisor performs the accord
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| Define Discharge of Alteration | One party alters and other does not consent
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| Define Discharge by statute of limitations | One party takes too long to bring lawsuit
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| True or False: When a condition precedent occurs, the contract arises, creating duties to perform | True
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| True or False: John agrees to work as Katy’s realtor until he sells her house. Katy closed on her house sale yesterday, so the contract has been discharged | True. This is an example of a condition subsequent.
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| True or False: The standard for materiality of a breach is when only 50% of a contract has been performed | False. The standard for the materiality of a breach is flexible, but generally based on the amount of the breach and timing for performance
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| True or False: Legal remedies for breach of contract include specific performance or injunction | False. Legal remedies for breach of contract include compensatory damages, nominal damages, liquidated (contractual) damages, and in certain circumstances, punitive damages
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| True or False: Nonperformance of a duty is always a breach of contract | False. Nonperformance of a duty generally is a breach of contract, but there are valid reasons to excuse performance.
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| True or False: Performance that falls short of complete performance in some minor respect, but does not deprive the other party of a material part of the consideration for which s/he bargained is known as substantial performance | True
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