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Western University
Philosophy 2080
James Hildebrand

Lecture 5 – Contracts III: Breach How are contracts terminated? 1) Performance or completion  Sometimes when one party says they are not going to perform the contract, the other party will (tendering performance) 2) Agreement  Have a term in the contract when it terminates  Substitution or novation: enter into a new agreement that takes the place of the old one  Condition precedent: This agreement will come into play when… o Must be satisfied in order for there to be an agreement  Condition subsequent: this agreement will continue in force until… o Agreement is in force until that thing happens, then it is no longer in force 3) Operation of law  Where the legal process operates to terminate an agreement o Bankruptcy 4) Frustration  Practical solution imposed by the courts where the performance of the parties have become impossible 1) Performance must be impossible; not inconvenient or uneconomical, but impossible 2) The frustrating event has to be not anticipated by the parties (nothing in the agreement says that if this thing happens then here is the result) 3) Through no fault of the parties (cant bring about frustration)  Example: Enter into a contract with you to buy 5000 Easter lily’s $5/piece before Easter supplied by your warehouse. The warehouse burns down. The contract is terminated through frustration.  If there was not term that said it had to be supplied by your warehouse, then performance is not impossible. It is, just at a higher cost. 5) Breach  Just because of a breach doesn’t mean it gets terminated  When will it result in a termination? o Fundamental breach – has to be a major breach of a major term of the contract  Doesn’t automatically terminate the contract; it gives the innocent party the right to terminate it, if not then the contract continues  Cannot wait around, have to exercise the right immediately or you lose that right  If you have a contract and then say you are not going to follow through (anticipatory breach)  I can either affir
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