Textbook Note - Chapter 9.pdf

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 2275A/B
Professor
Philip King
Semester
Fall

Description
Termination and Enforcement of Contracts Termination of Contracts: An Overview Through performance: When both parries fulfill their contractual obligations to each other. Ideal way of concluding a contract… Through agreement: Parties are always free to voluntarily bring their contract to an end. Through frustration: The event must be one that marks performance functionally impossible or illegal. Through breach: When particularly serious, a breach of contract can release the innocent party from having to continue with the contract. Termination through Performance Examples: A contract to buy and sell a house is performed when the purchase price is paid and title of the property is transferred to the buyer. A contract is performed when all of its implied and express promises have been fulfilled. Performance by Others Vicarious performance: Performance of contractual obligations through others. Termination by Agreement By agreement between parties Enter into a whole new contract: Novation Novation: The substitution of parties in a contract or the replacement of one contract with another. Vary certain terms of the contract End the contract May decide to simply terminate the contract. Substitute a party Transfer of Contractual Rights Assignment: The transfer of a right by an assignor to assignee. Termination by Frustration Frustration: Termination of a contract by an unexpected event or change that makes performance functionally impossible or illegal. Must establish that the event was: Dramatic and unforeseen A matter hat neither party had assumed the risk of occurring Arose without being either party's fault Makes performance of the contract functionally impossible or illegal All of these elements must be demonstrated. Enforcement of Contracts Balance of probabilities: Proof that there is a better than 50 percent chance that the Balance of probabilities: Proof that there is a better than 50 percent chance that the circumstances of the contract are as the plaintiff contends. Privity of contract The plaintiff must establish that there is a contract between the parties. Breach of contract Must prove the other party (the defendant) has failed to keep one or more promises or terms of the contract. Entitlement to a remedy The plaintiff must demonstrate that it is entitled to the remedy claimed or is otherwise deserving of the court's assistance. Privity of Contract Critical ingredient to enforcing a contract. Statutory modifications of the Doctrine Modified by statute in two important areas: Consumers purchases Insurance Breach of Contract Classification of the Breach Condition: An important term that, if breached, gives the innocent party the right to terminate the contract and claim damages. Warranty: A minor term that, if breached, gives the innocent party the right to claim damages only. Innominate Term: A term that cannot easily be classified as either a condition or a warranty. Exemption and Limitation of Liability Clause Fundamental breach A breach of contract that affects the foundation of the contract. Timing of the Breach Anticipatory Breach: A breach that occurs before the date for performance. Entitlement to a Remedy Damages: Monetary compensation for breach of contract or other actionable wrong. The Measure of Damages Expectation damages: Damages which provide the plaintiff with the monetary equivalent of contractual performance. Punitive Damages: Damages that are awarded to punch the defendant. Awarded for "Malicious,
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