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LAW 122 (618)
Chapter 11

LAW122- Chapter 11- Discharge and Breach.docx

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Law and Business
LAW 122
Theresa Miedema

Tender of payment LAW122- Chapter 11- Discharge and Breach Performance Tender of performance Option to  Examine ways in which a contract may be brought to an end terminate  Discharge- a contract is discharged when the parties are relived of the need to subsequencent and condition do anything more precedent  Ways contract can be discharged Rescission o Performance Accordand o Reflect the parties agreement or intentions Areegemnt of satisfaction intention o Operation of law Discharge Release o One party fails to preform as expected  Appreciate that a contract generally will not cease to exist merely Viaration because the parties largely ignore it Novation Discharge by performance (Page 251)  Performance- occurs when the parties fulfill all of the obligations contained in Waiver the contract Frustration  Difficult to determine whether proper performance occurred  Any deviation from the terms of contract—may be considered a breach rather Operation ofLimitation law period than performance—entitled the innocent party to a remedy Time of performance Breach Bankruptcy  Time is not of the essence- in most situations  Although a time limit may be set, it can be performed late o Can be held liable for losses—result of delay  Late performance can be refused—contract will not be discharged by performance Tender of payment  Most contract require a payment of money of at least one party  General rule: creditor can insist on legal tender 1. Debtor has the primary obligation of locating the creditor and tendering payment—even if creditor has not asked  Reasonable tender only made once  Interest does not accrue on a payment 2. Creditor can insist on receiving legal tender  Legal tender- payment of notes (bills) and coins to a certain value  Does not have to accept payments of cheque or electronic debit  Debtor must provide the exact amount 3. Debtor does not have to actually tender payment if it would obviously be refused  Creditor indicates beforehand that it intends to reject payment  Advantage—money  Disadvantage—money risky, misplaced, stolen  Most common options—debit cards, credit cards, cheques  Payment of debit cards o Debit card- plastic card that allows a person to debit, or withdraw, funds from a bank account o Final once banks authorizes or refuses payment, the system no longer plays a role in the transaction o Cardholder cannot revoke or cancel transaction  Payment of credit cards o Credit card- operates by allowing a cardholder to obtain credit, or a loan, for the purpose of paying for goods or services o 3 relationships governed by a contract i. Card issuer to cardholder long list of rights and obligations  Card issuer—arranges credit by paying goods or services  Cardholder—promises to repay both value of purchases and agreed interest ii. Card issuer and merchant customer can pay by credit card only if the merchant has an agreement with the card issuer  Benefit of merchant— increase sales, relieved of the need to chase customers for payment iii. Cardholder and merchant not affected by the use of a credit card 1 LAW122- Chapter 11- Discharge and Breach  Cardholder—can not revoke payment if purchases become defective—only option is to sue merchant on the underlying sales contract o Remains liable to the card issuer  Merchant—entitled to retain funds received from the card issuer  Payment of cheques o Conditionally discharges a contractual debt o Bank may refuse to honour cheques—forged, account has been overdrawn Tender of performance  Provisions of goods and service rather than money  General rule: obligations must be exactly performed  Damages- amount of money that the court may order the defendant to pay to the plaintiff  Discharge if Substantial performance- generally satisfies the contract but is defective or incomplete in some minor way o Court will consider a number of factors—nature of defect, difference between contract price and the cost of curing the defect o Innocent party not requires to pay for work that’s not done o If builder leaves a work site without providing at least substantial performance  Parties may have used a single contract to deal of series of tasks  May create entire contract o Entire contract- says that no part of the price is payable unless all of the work is done Discharge by agreement (Page 258)  Both parties can discharge a contract even though it was not fully performed  Types of discharge can occur in several ways Option to terminate  Option to terminate- contractual provision that allows one or both parties to discharge a contract without the agreement of the other  Unilateral right to discharge o Option inserted into contract at outset o Often subject to restrictions  Eg employment terminable on two months notice Condition subsequent and condition precedent  Conditional contract o Parties agree that contract is affected by event  Condition subsequent- contractual contract that states that the agreement will be terminated if a certain event occurs o Different from option to terminate does not have to be exercised by either party to be effective o Effect of condition  Existing contract automatically terminated  Contrast: option requires decision by one party  True condition precedent- contractual term that states that an agreement will come into existence only if and when a certain event occurs o Effect of condition  Contract automatically created if event occurs  No further agreement by parties needed  Condition precedent- contractual term that states that while a contract is formed immediately, it does not have to be preformed unless and until a certain event occurs o Effect of condition  Contract created immediately  Performance of primary obligations suspended  Eg purchaser need not pay price  Performance of secondary obligation required
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