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Lecture 7

ACTG 2P40 Lecture 7: Lecture 7

7 Pages
25 Views
Winter 2013

Department
Accounting
Course Code
ACTG 2P40
Professor
Katharine Book
Lecture
7

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March 03, 2014
ACTG 2P40
Chapter 12
Discharge of Contracts
1. Discharge by Performance
- SHORT ANSWER
2. Discharge by Agreement
a. Waiver
b. Accord and Satisfaction
- Where a party substitute their performance with something else and the other party
accepts it
- More often instead of paying money, the party accepts to perform something
c. Novation
- Actually substitute one of the parties with a contract itself
- Has to be a consent
- For example – when selling a business, the buyer is accountable for all the accounts,
and the contracts, and both the parties must agree to it
d. Condition Precedent
- Condition that states if an event occurs prior to the liability end of the contract both
the parties can walk away from the contract
- Home builders not getting a license after agreeing to build it however
e. Condition Subsequent
- Condition that states if an event occurs after the liability end of the contract both the
parties can walk away from the contract
- Promoter organizing a contract – band may not show up, hall may burn down, it lets
them out of liability
f. Option to Terminate
- Simply clause in the contract that says something like either parties can terminate
within 30 days of the contract
March 03, 2014
ACTG 2P40
3. Discharge of Frustration – LONG ANSWER
- Another way to get out of a contract
- But must prove these:
oExternal causes -
oMade performance impossible or radically different – has to be something
unique
a. The Doctrine of Frustration
- Court almost always assumes property is unique
-Realty – most common place you could see frustration
b. Self-Induced Frustration
- Cannot be self-induced, it has to be external
- Frustration has to be caused by some external force of which cannot be stopped by
the party
- If it’s a negligent act by the parties it might not be considered an external cause
c. The Frustrated Contracts Act and Remedies for Frustrated Contracts
- Gives the court the power to do whatever they like
- They can give back to the parties deposits, or anything else to even out the loss
- It has made it more fair
4. Discharge by Operation Law
-Limitations Act – statutory, the amount of time you have to bring a law suit from the
time it occurred
oEvery claim is 2 years from the cause of action regardless of what it is
oIf you fail to sue within the time, you have loss your lawsuit
-Discoverability –idea that says the 2 years should start when you discover when
you have realized a causation has occurred.
Chapter 13 – Breach of a Contract
1. *****Fundamental Breach

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Description
March 03, 2014 ACTG 2P40 Chapter 12 Discharge of Contracts 1.Discharge by Performance SHORT ANSWER 2.Discharge by Agreement a.Waiver b.Accord and Satisfaction Where a party substitute their performance with something else and the other party accepts it More often instead of paying money, the party accepts to perform something c.Novation Actually substitute one of the parties with a contract itself Has to be a consent For example when selling a business, the buyer is accountable for all the accounts, and the contracts, and both the parties must agree to it d.Condition Precedent Condition that states if an event occurs prior to the liability end of the contract both the parties can walk away from the contract Home builders not getting a license after agreeing to build it however e.Condition Subsequent Condition that states if an event occurs after the liability end of the contract both the parties can walk away from the contract Promoter organizing a contract band may not show up, hall may burn down, it lets them out of liability f.Option to Terminate Simply clause in the contract that says something like either parties can terminate within 30 days of the contract
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