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Lecture 7

ACTG 2P40 Lecture Notes - Lecture 7: Specific Performance, Liquidated Damages, Clean Hands

7 pages44 viewsWinter 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
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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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