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LAW 122 (625)
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Chapter 11

Chapter 11 - Discharge & Breach.doc

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Department
Law and Business
Course
LAW 122
Professor
Stan Benda
Semester
Winter

Description
Chapter 11 DischargeBreachAs we learned in chapter 910 some contracts come to an end when they are voided or rescinded Most contracts however are brought to an end via dischargeoDischargeda contract is discharge when the parties are relieved of the need to do anything more under the contractDISCHARGE BY PERFORMANCEThe most common form of discharge is performanceoPerformanceoccurs when the parties fulfill all of the obligations contained in the contractHowever in some situations it is difficult to determine whether proper performance has occurred As a general rule the parties must performance exactly as the contract requires A deviation from the terms is considered a breachTime of PerformanceAlthough the parties generally have to perform exactly as the contract says the courts usually hold that time is not of the essence In other words even if a contract states that performance must occur by a particular date a party may be entitled to perform lateHowever if it does so it can be held liable for losses that the other party suffers as a result for the delayIn some situations time is of the essence If so late performance can be refused and if that happens the contract will not be discharged by performanceFinally even if the parties do not agree on a specific time or date the court s will find that performance must occur within a reasonable time having regard to all of the circumstances including the subject matter of contract Eg A contract dealing with perishable items or a instable market may require the parties to act promptlyTender of PaymentMost contracts require a payment of money by at least one of the partiesBusiness people should be aware of some very specific rules that govern paymentsiThe debtor has the primary obligation of locating the creditor and tendering offering payment even if the creditor has not asked for itMust be reasonable cannot occur at an inconvenient time or under inconvenient circumstance oA reasonable tender offer has to be made only onceiiUnless the contract says otherwise a creditor can insist on receiving legal tender oConsequently a creditor generally does not have to accept payment by ways of cheque or electronic debit oAs a precaution business people who intend to pay by anything other than a precise amount of legal tender may want to provide for that possibility in the contractoLegal Tenderis a payment of notes bills and coins to a certain valueTender of Performance1 of 7
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