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
Through breach: When particularly serious, a breach of contract can release the innocent
party from having to continue with the contract.
Termination through Performance
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
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:
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
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,