A Contract is Discharged when the parties are relieved of the need to do anything more.
Discharge by Performance.
• The most common type of discharge.
• It occurs when the parties fulfill all of the obligations in the contract EXACTLY
• Time is NOT of the essence in most situations
• Time is only of the essence is the parties agree to that fact.
Tender of Payment
• The debtor has the primary obligation of locating the creditor and tendering
payment, even if the creditor has not asked for it.
• If such a tender is rejected, the debtor still has to pay the debt, but it can wait for
the creditor to come by.
• A creditor can insist on receiving legal tender, which is payment of notes (bulls)
and coins to a certain value.
• Creditor does not have to accept payment by way of cheque to electronic bill.
• A debtor does not have to actually tender payment if it would obviously be
Tender of Performance
• The party who owes the obligation is required to properly tender performance
• The party is discharged of its duty to perform if the other party renders
o SUBSTANTIAL PERFORMANCE
Generally satisfies the contract but is defective or incomplete in
some minor way.
Party may be discharged from further obligations if it provides
The nature of the defect is the difference between the contract price
and the cost of curing the debt.
You care not required to pay for work that was not done.
The contract price will be reduced by the amount that the innocent
party reasonably paid a third party to finish.
An entire contract says that no part of the price is payable until all
of the work is done.
Landowners are only liable for those benefits that they chose to
accept after the builder breached the contract. If the landowners
chose to use the materials that weren’t used (because the builder
didn’t finish) they will have to pay for the. But they probably will
not be liable for the work that the builder performed. Discharge by Agreement
1. OPTION TO TERMINATE
a. A contractual provision that allows one or both parties o discharge a
contract without the agreement of the other.
b. It is frequently subject to restrictions.
c. You can be required to compensate the other party for the losses it suffered
as a result of early termination.
2. CONDITION SUBSEQUENT AND CONDITION PRECEDENT
a. A condition subsequent is a contractual term that states that the
agreement will be terminated if a certain event occurs.
b. A true condition precedent is a contractual term that states that an
agreement will come into existence only if and when a certain even
occurs. (EG something is illegal but a contract will come into place when
it becomes legal)
c. A 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 even occurs. (VERY common in contracts for the sale
i. Even if you don’t get the piece of land until something occurs (you
find funding) the person cannot sell the land to someone else
because the contract actually starts right away even if it is
suspended UNLESS you insert something that says you can.
ii. Subsidiary Obligation say that you have to make reasonable
effort to satisfy the condition precedent. If you fail to do so, you
could be held liable for the losses that you case by breaching that
a. A contract is executory if a party has not full performed its obligations.
b. A contract is executed if a party has fully performed its obligations
c. Recission occurs when the parties agree to being their contract to an end,
when it is EXECUTORY on both sides.
4. ACCORD AND SATISFACTION
a. If ONE party has fully performed
b. Then the agreement to discharge a contract may become unenforceable for
lack of consideration.
c. You cannot “suffer a detriment” by giving up the right to insist upon
d. Accord and satisfaction occurs when a party gives up its right to demand
performance IN RETURN for some new benefit.
e. It required fresh consideration.
a. An agreement under seal to discharge a contract.
b. Since it is under seal, it does not require consideration.
a. Involves an agreement to vary the terms of an existing contract. b. This is used when you actually want to maintain the relationship.
c. You give up the rights you held under the original terms of the contract
OR accept new obligations under the modified terms of the contract.
a. Process by which one contract is discharged and replaced with another.
b. It requires substantial changes .
c. Usually, novation involves a substitution of PARTIES rather than
d. The parties under the new contract essentially adopt the rights and
liabilities that existed under the old contract.
e. It is essentially stepping into someone’s shoes. For example, when you sell
your house, someone else takes over the mortgage.
a. Occurs when a party abandons a right to insist on contractual performance.
b. Does NTO require consideration OR a seal.
c. Can eith