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Final

Chapter 11 Exam Notes

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Department
Law and Business
Course
LAW 122
Professor
Henry Ojambo
Semester
Winter

Description
George Nico Business Law (Exam Notes) Chapter 11: Discharge and Breach The Nature of Discharge  ­ Some contracts end when voided or rescinded o Treated as if they never existed (CH 9, 10) ­ Most contracts end in discharge (parties relieved of need to more performance), through: o Performance o Agreement o Operation of law o Breach Discharge by Performance ­ Performance: fulfillment of obligations o If obligations not clearly defined, may be difficult to determine if proper performance  occurred o Normally parties must perform exactly as contract requires o Time of performance not usually important  Time usually not of the essence (damages for lateness)  May change by contract (boilerplate clause) or notice Tender of Payment ­ Performance often includes payment of money o Creditor can insist on legal tender (cash) o Debtor has primary obligation to tender payment in reasonable manner o Debtor does not have to tender payment if it would be obviously refused ­ Use of legal tender risky because lost or stolen cash extremely difficult to recover o Other common payment options  Debit cards: payment is final  Credit cards: payment made using credit card company  Cheques: conditional payment as bank may not honour, or customer may  countermand cheque before cashed  PayPal: 3PPS (third party payment system) Tender of Performance ­ When performance involves provision of goods or services rather than money o General rule: obligations must be exactly performed o Sometimes discharge if substantially perform  Entitled to contractual damages for defect o Difficulties with entire contracts: no payment due unless all work performed Discharge by Agreement ­ Parties may agree to discharge contract o Option to terminate  o Conditions subsequent and precedent George Nico Business Law (Exam Notes) o Rescission o Accord and satisfaction o Release o Variation o Novation o Waiver Conditions ­ Conditional contract o Parties agree that contract is affected by an event ­ Types of conditions o Condition subsequent  Contract ends if specified event occurs o Eg. Open­air concert cancelled if bad weather o Eg. Contract ends when a specific date arrives  Effect of condition • Existing contract automatically terminated • Contrast: option requires decision by one party • Contract exists, and parties must perform, until event occurs o True condition precedent  Contract comes into existence only if specified event occurs o Eg. Arms sale exists if government approves  Effect of condition • Contract automatically created if event occurs • No further agreement by parties needed • Contract does not exist, and therefore no obligation to perform, unless  event occurs o Condition precedent   Contract must be performed only if event occurs  • Eg. Sale of house conditional on sale of purchaser’s house  Effect of condition • Contract created immediately, but performance suspended • Performance of primary obligations suspended o Eg. Purchaser need not pay vendor need not transfer house • Performance of secondary obligation required o Eg. Purchaser must try to sell own house Executory and Executed Contracts ­ Executory contract: a party has not fully performed its obligations ­ Executed contract: a party has fully performed  ­ Contracts may be o Executory on both sides (neither party has fully performed o A mixture of Executory and executed (one party has fully performed) Rescission George Nico Business Law (Exam Notes) ­ Rescission: agreement to terminate existing contract o Note: distinguish “rescinded” contract (CH 9) ­ A contract that is executory on both sides may be discharged through rescission o Both parties provide consideration by giving up right to other’s performance ­ Agreement to discharge partially executed contract may be unenforceable due to lack of  consideration Accord and Satisfaction ­ Occurs when a party gives up right to demand performance in return for a new benefit ­ Accord: new agreement, satisfaction: new consideration ­ Method used to discharge partially executed contract o Executed party gives up right to full performance o Executory party gives new consideration  Eg. Original: $5000 for tow  ▯accord and sa
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