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ADMS 2610 (400)
Lecture

ADMS2610-Session3-Ch13.docx


Department
Administrative Studies
Course Code
ADMS 2610
Professor
Robert Levine

Page:
of 3
ADMS2610
Session 3
Chapter 13 (pg. 230-242)
Performance of Contractual Obligations
Nature and Extent of Performance
- Must be done according to terms of contract
- Must be exact and precise in order to constitute discharge
- Anything less is a breach
Tender (the act of performing a contract or the offer of payment of money due
under a contract)
- Tender of Payment
o Performance is made when money paid at time and place required
under the contract
- Legal Tender
o Cannot be refused if tendered by buyer
o Seller can refuse credit card, check, bill of exchange unless specified as
form of payment
- Debt
o If proper tender of payment is made and refused by creditor, interest
stops running
o Debtor need not attempt to pay again
- Tender of Performance of an Act
o Must deliver goods to proper place at proper time
o If refusal by buyer seller need not tender again
Discharge by Means Other than Performance
- Contracts can be discharged in a number of ways
- Termination as a Right
o Option to terminate by one party giving notice to the other
o Contract provides for a termination right
o If done improperly may be liable for damages for improper
termination
- External Events
o Express Terms (discharge by the occurrence of an event specified in
the contract):
Condition Subsequent (a condition that alters the rights or
duties of the parities to a contract, or that may have the effect
of terminating the contract if it should occur)
Force Majeure (a major, unforeseen event that occurs that
prevents the performance of a contract or causes damage to
property)
Act of God (an unanticipated event that prevents the
performance of a contract or causes damage to
property)
o Implied Terms (discharge by the occurrence of an even that by
custom of the trade would normally result in exemption from liability)
Conditions subsequent may be implied by the courts
Example: common carriers ordinarily responsible for
ordinary losses or damage are exempt from acts of God
o Frustration (a contract under which performance by a party is
rendered impossible due to an unforeseen or unexpected change in
circumstances affecting the agreement)
Frustration results in the contract being discharged
Force Majeure Clause should be inserted into the agreement
Sale of Goods Act
Provides for frustration in certain circumstances
Examples:
Personal services of one party required
Event alters circumstances such that what would have
been performed is radically different than that
contemplated by the parties
o Usually arises during war
o Goods diverted due to war
Frustration requires impossibility not mere hardship or
greater expense
Self Induced Frustration (doing something not necessarily
required to avoid a contract)
Non Culpable Dismissal (dismissal of an employee where the
inability to perform is not self induced but due to frustrating
factors)
Loss of frustration normally lies with the parties absorbing
their losses as of the time of the frustrating event unless
contract is fully executed by one party
Frustrated Contracts Act
Overcame the problems of the Common law rules of
frustration
o Allows court to apportion loss equitably between
the parties
o Allows for recovery of deposits and/or advances
o Allows for retention of funds to cover expense
when only part performance has occurred
o Seven provinces have Frustrated Contracts Act
o Those who do not are still subject to the common
law
Condition Precedent a condition that must be satisfied before a contract may
come into effect
- Often agreement is prepared and signed, only performance is postponed
- If condition is not met, it discharges the contract
- Inserted for the benefit of the one party, not both
Operation of law
- Discharged by operation
o Enemy states
o Specific legislation
Bankruptcy
Bills of Exchange Act
o Doctrine of Laches (undue delay in brining an action against a party
for failure to perform at Common law)
o Statutory Limitations
o Mergers
Discharge by Agreement
- Waiver (an express or implied renunciation of a right or claim)
o If neither party has fully performed, consideration is flowing to each
party
o If one party fully performed but the other has not, performance party
may waive rights to performance
o Without consideration is a mere gratuitous promise
o Must either provide consideration or sign under seal
- Novation (mutual agreement to amend the terms or parties to an existing
agreement)
o Requires consent of all parties
Merger terms and parties remain the same, the form of the
agreement changes
Substituted agreement change or parties or change of terms
or both
- Material Alteration (major alteration of an agreement that has the effect of
discharging the contract and replacing it with another)
o Change must go to root of agreement
o Minor alterations or a number of alterations is not enough
- Substitute Agreement (substitution may effect the discharge)
- Breach of Contract (the failure of a party to perform a contract according to
its terms)
o Gives one party the possible right to discharge the agreement