Breach of Contract “a situation in which one of the parties to a contract fails or otherwise refuses to perform the obligations established in that contract”

Breach of ContractBreach of Contract

““a situation in which one of the parties a situation in which one of the parties to a contract fails or otherwise refuses to a contract fails or otherwise refuses to perform the obligations established to perform the obligations established

in that contract”in that contract”

Conditions Resulting in BreachConditions Resulting in Breach

1) performance is not completed within 1) performance is not completed within the time limits agreed to by the partiesthe time limits agreed to by the parties

2) performance has been negligent or 2) performance has been negligent or unskillfulunskillful

3) wrongful performance or 3) wrongful performance or nonperformancenonperformance

Remedies for Breach Remedies for Breach

1) Damages1) Damages

2)Equitable Remedies2)Equitable Remedies

DamagesDamages

Compensatory (Actual)Compensatory (Actual) Incidental and ConsequentialIncidental and ConsequentialPunitive (Exemplary)Punitive (Exemplary)NominalNominalLiquidatedLiquidated

Equitable RemediesEquitable Remedies

Two most common:Two most common:

1) specific performance1) specific performance

2) injunction2) injunction

Third Party Contracts and Third Party Contracts and AssignmentsAssignments

Third Party: a person who may in some Third Party: a person who may in some way, be affected by a contract but who is way, be affected by a contract but who is not one of the contracting parties (outside not one of the contracting parties (outside party)party)

Third Party Beneficiary: “person not party Third Party Beneficiary: “person not party to a contract, but whom parties intended to to a contract, but whom parties intended to benefit”benefit”

Third Party BeneficiaryThird Party Beneficiary

Types:Types:

1) creditor beneficiary1) creditor beneficiary

2) donee beneficiary2) donee beneficiary

AssignmentsAssignments

means whereby one party in a contract means whereby one party in a contract conveys right to another person, who is conveys right to another person, who is not a party to the original contractnot a party to the original contract

3 parties involved:3 parties involved:1) assignor1) assignor2) assignee2) assignee3) obligor: the remaining party to the original 3) obligor: the remaining party to the original

agreementagreement

Commercial PaperCommercial Paper(Negotiable Instruments)(Negotiable Instruments)

““a writing drawn in a special form which a writing drawn in a special form which can be transferred from person to person can be transferred from person to person as a substitute for money or as an as a substitute for money or as an instrument of credit”instrument of credit”

2 basic types:2 basic types:1) notes (including CDs)1) notes (including CDs)2) checks (including drafts)2) checks (including drafts)

““Promises to Pay”Promises to Pay”(Promise Instruments)(Promise Instruments)

Notes:Notes:1) promissory1) promissory2) demand: payable whenever the payee 2) demand: payable whenever the payee

demands paymentdemands payment3) installment: the principal together with the 3) installment: the principal together with the

interest on the unpaid balance is payable in interest on the unpaid balance is payable in installments at specified timesinstallments at specified times

Parties: maker and payeeParties: maker and payee

Certificates of DepositCertificates of Deposit

““the acknowledgement of a bank of a the acknowledgement of a bank of a receipt of money with an agreement of receipt of money with an agreement of repayment”repayment”

CD is a note of the bankCD is a note of the bankwritten for specific period of timewritten for specific period of timehigher interest for longer-term CDshigher interest for longer-term CDs

““Orders to Pay”Orders to Pay”(Order Instruments)(Order Instruments)

DraftsDrafts

ChecksChecks

DraftsDrafts

““a written order signed by one person a written order signed by one person requiring the person to whom addressed requiring the person to whom addressed to pay a particular sum of money, to order to pay a particular sum of money, to order or to bearer, on demand or at a certain or to bearer, on demand or at a certain time”time”

more complicated than notes because more complicated than notes because they require 3 partiesthey require 3 parties

Parties: drawer, drawee, and payeeParties: drawer, drawee, and payee

Drafts (cont’d)Drafts (cont’d)

Money Order: type of draft that may be Money Order: type of draft that may be purchased from banks, post offices, purchased from banks, post offices, telegraph companies, and express telegraph companies, and express companies as a substitute for a checkcompanies as a substitute for a checkdrawn on the funds of the organization that drawn on the funds of the organization that

issues itissues itpurchaser fills in their name and address and purchaser fills in their name and address and

the name of the payee on the instrumentthe name of the payee on the instrumentpurchaser is given a receiptpurchaser is given a receipt

ChecksChecks

““an order by the depositor on the bank to an order by the depositor on the bank to pay a sum of money to a payee”pay a sum of money to a payee”

parties: drawer, person/business, bearerparties: drawer, person/business, bearer

Types: 1) certifiedTypes: 1) certified

2) cashier’s2) cashier’s

Requirements of Negotiable Requirements of Negotiable InstrumentsInstruments

1) In Writing1) In Writing2) Signed by Maker or Drawer2) Signed by Maker or Drawer3) Unconditional Promise or Order to Pay3) Unconditional Promise or Order to Pay4) State a Fixed Amount of Money4) State a Fixed Amount of Money5) Payable on Demand or at a Definite 5) Payable on Demand or at a Definite

TimeTime6) Payable to Order or to Bearer6) Payable to Order or to Bearer

Order PaperOrder PaperBearer PaperBearer Paper

Transfer of Negotiable InstrumentsTransfer of Negotiable Instruments

2 methods:2 methods:Negotiation: “the act of transferring Negotiation: “the act of transferring

ownership of a negotiable instrument to ownership of a negotiable instrument to another party”another party”

Indorsement: “the signature or statement of Indorsement: “the signature or statement of purpose by the owner on the back of a purpose by the owner on the back of a negotiable instrument, which indicates the negotiable instrument, which indicates the future control of the instrument”future control of the instrument”

Types of IndorsementsTypes of Indorsements

Blank: “having no words other than the Blank: “having no words other than the signature of the indorser”signature of the indorser”

Special: “designates the particular person Special: “designates the particular person to whom payment is to be made”to whom payment is to be made”

Restrictive: “prevents the use of the Restrictive: “prevents the use of the instrument for anything except the stated instrument for anything except the stated use”use”

Qualified: “limits the liability of the Qualified: “limits the liability of the indorser”indorser”

Mental AnguishMental Anguish

““mental suffering resulting from grief, mental suffering resulting from grief, severe disappointment, indignation, severe disappointment, indignation, wounded pride, shame, public humiliation, wounded pride, shame, public humiliation, despair, etc. usually accompanied by despair, etc. usually accompanied by physical injury or by an outrageous physical injury or by an outrageous intentional or grossly negligent act”intentional or grossly negligent act”

Physical Impact RulePhysical Impact Rule

Exceptions to Physical Impact RuleExceptions to Physical Impact Rule

Intentional Infliction of Mental DistressIntentional Infliction of Mental Distress

Contractual BreachesContractual Breaches

Negligent Infliction of Mental DistressNegligent Infliction of Mental Distress

Punitive DamagesPunitive Damages

NegligenceNegligence

““failure to exercise ordinary care; omission failure to exercise ordinary care; omission to do something which a reasonable to do something which a reasonable prudent person would do under ordinary prudent person would do under ordinary circumstances or the doing of something circumstances or the doing of something which a reasonable and prudent person which a reasonable and prudent person would not do; the lack of due care”would not do; the lack of due care”

intentional or accidentalintentional or accidental