Chapter 11: Discharge & Breach
Many of the same principle apply when a contract requires the provision of goods &
services rather than money.
While the party who owes the obligation is required to properly tender performance,
it only has to do so once.
Furthermore, that party is discharged of its duty to perform if the other party
renders performance impossible.
oDamages: is the amount of money that the court may order the defendant to pay to the
A tender is usually effective only if the goods or services conform precisely with terms of
the contract. Occasionally, however, a party may be discharged from further obligations
if it provides substantial performance.
oSubstantial Performance: generally satisfies the contract but is defective or incomplete in
some minor way.
In deciding whether substantial performance has occurred, the court will consider a
number of factors, including the nature of the defect, and the differences b/t the contract
price & the cost of curing the defect.
E.g. many building contracts stat that payment is due only once construction is
completed. But, if the builder leaves a work site w/o having installed say, several door
knobs, it will likely be discharged from its obligations and entitled to payment.
Of course, if a contract is discharged by performance, the innocent party is not required
to pay for work that was not done.
Difficulty may arise if a builder leaves a work site w/o providing at least substantial
performance. There are two possibilities.
i.The parties may have used a single contract to deal with a series of tasks. In that
situation, part of the overall price is earned each time that a task is performed.
oE.g. Cut the plaintiffs lawn 10 times = $100, but if only cut twice, the court
may say you’re only entitled to $20.
ii.Even if the agreement requires a number of tasks to be performed, the parties may
create an entire contract.
oEntire Contracts: says that no part of the price is payable unless all of the work is done.
E.g. A builder agreed to construct a house in exchange for $100,000. After doing half the
job, he ran out of money and stopped work. The landowner used the materials (lumber &
nails) that the builder left behind and finished the house. If the builder demands
payment, the owner will probably only have to pay for the materials, but will not be
liable to pay for the work the builder performed. The landowner had agreed to pay for a
whole house – not half.
DISCHARGE BY AGREEMENT
In some situations, one or both parties can discharge a contract even thought it was not
Option to Terminate
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