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Law 122 - Chapter 11 - My Notes.docx

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Law and Business
LAW 122
Theresa Miedema

Chapter 11 Discharge and Breach Discharged – a contract is discharged when the parties are relived of the need to do anything more Performance – occurs when the parties fulfill all of the obligations contained in the contract  Time is not of the essence – in most situations, it may be held liable for losses that the other party suffered as a result of the delay  Time is of the essence if the parties agree to that face, either expressly or impliedly Legal Tender – is a payment of notes (bills) and coins to a certain value Debt Card – is a plastic card that allows a person to debit, or withdraw, funds from a bank account Credit Card – operates by allowing the cardholder to obtain credit, or a loan, for the purpose of paying for goods or services Damages – is the amount of money that the court may order the defendant to pay to the plaintiff Substantial Performance – generally satisfies the contract but is defective or incomplete in some minor way  If a contract is discharged by substantial performance, the innocent party is not required to pay for work that is not done. Entire Contract – says that no part of the price is payable unless all of the work is done Discharge by Agreement Option to Terminate – is a contractual provision that allows one or both parties to discharge a contract without the agreement of the other Condition Subsequent – is a contractual term that states that the agreement will be terminated if a certain event occurs True Condition Precedent – is a contractual term that states that an agreement will come into existence only if and when a certain event occurs Condition Precedent – is a contractual term that states that while a contract is formed immediately, it does not have to be performed unless and until a certain event occurs Conditions Subsequent, True Conditions Precedent, and Conditions Precedent Type of Condition Time of Creation of Contract Effect of Condition Condition subsequent Immediate Discharge of existing contract Tree condition precedent If and when condition is satisfied Creation of contract Condition precedent Immediate Suspension of primary obligations Rescission Executory – a contract is exectory if a party has not fully performed its obligations  If a contract is executory on both sides, it can be discharged through rescission Exectuted – a contract is executed if a party has fully performed it obligations Rescission – occurs when the parties agree to bring their contract to an end  Each party suffers a detriment by giving up the right to insist upon performance of the original contract Accord and Satisfaction o A mere agreement to discharge a contract may be unenforceable for lack of consideration Accord and Satisfaction – occurs when a party gives up its right to demand contractual performance in return for some new benefit  “Accord” refers to the parties new agreement  “Satisfaction” – refers to the new consideration provided by the party that is relieved of the need to perform the original contract  As a general rule, a promise to pay a smaller sum cannot discharge an obligation to pay a larger amount Release – is an agreement under seal to discharge a contract Variation – involves an agreement to vary the terms of an existing contract  A variation requires fresh consideration on both sides of the agreement  A party unusually provides consideration either by giving up rights that it held under the original terms of the contract, or by accepting new obligation under the modified terms of the contract Novation – is a process in which one contract is discharged and replaced with another  Novation involves a substitution of parties rather than obligations 1. Novation cannot occur unless all of the affected parties consent to the new arrangement 2. Which new obligations or new parties are introduced, the agreement to discharge the old contract is supported by consideration  The parties to the original contract agree to give up their rights under that agreement 3. Although novation can be achieved wither expressly or impliedly, as a matter of risk management, the agreement should always be clearly written Waiver – occurs when a party abandons a right o insist on contractual performance 1) Waiver does not require consideration or a seal 2) Waiver does not have to take any particular form 3) Because wavier allows a contractual party to obtain a benefit without providing anything in return, the courts require clear evidence that the other party intended to waive its rights 4) Although the case are somewhat inconsistent, the better view is that waiver is effective only is the party who re
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