Obj. 2.02 Understand terminating, transferring, and breaching a contract.

Obj. 2.02 Understand terminating, transferring, and breaching a contract.

Complete o All terms have been carried out properly and completely.

Timeo Court will honor time request, if it is deemed “of the essence.” o If not mentioned in contract, then a reasonable time will be assumed.

Satisfactoryo Law requires that services be completed in a satisfactory manner.o Reasonable person test

• Would a reasonable consider the work to done in satisfactory manner?

Substantialo Slightly less than full performance

• Must meet the following rules:• Acted in Good Faith• Completed Major Components of Contract• Only Minor Details Incomplete.

Tender of Performanceo Tender – Offer to Performo Must make tender even if you know the other party will not

perform their part of the contact.

Mutual Release (Rescission)o Each side releases the other side from the contract.

Accord and Satisfactiono Substitute one contract for another.

Death or Disabilityo Only allowed in Personal service contracts.o What is personal service?

• Photographer• Artist

o Any other contract must be completed.

Destruction of subject mattero If the subject matter is essential to the contract then it will be

discharged.

Performance becomes illegalo Any illegal contract is void.

Wrongful Alterationo Any altering or changing of a contract will discharge parties to the

agreement. Statute of Limitations

o Individual states have a time limit on lawsuits to be filed.o What is the only crime/tort that doesn’t have a time limit?

Bankruptcy o Debtors can be discharged from contracts after filing for bankruptcy.

Assignment Delegation Novation

Legally transferring your RIGHTS in a contract.o Assignor – party who transfers the right.o Assignee – party to whom the right is transferred.

No consideration needed. Must not change the obligations in the contract. Must be a RIGHT not a DUTY. Assignor is responsible for contract fulfillment.

Transfer a duty. Delegating party is still responsible for the contract being

fulfilled. Contracts that CANNOT be delegated:

o Promise to perform service personally.o Exercise of personal skill or judgment.o Contract prohibiting delegation.

Replacing a party to a contract with a new one. The other terms to the contract remain the same.

Wrongful failure to perform one or more promises in a contract.

Anticipatory Breacho Notified that a party to the contract will not fulfill their part of the

contract prior to the required time of fulfillment.o Lawsuit may be filed early in this case. Exception to the rules: Refusal

to pay money owed at a future date.

Acceptance of Breacho Accept the breach of contract and discharge the other party

without asking for damages.• Why?

Rescission and Restitutiono Canceling the contract and returning anything that has been

received

Money Damageso Actual – Damages DIRECTLY related to breach.o Compensatory – Award only for injuries suffered nothing more.o Consequential – Damages that DO NOT flow directly from

breach.o Incidental – Reasonable expenses that INDIRECTLY from breach

of contract.o Liquidated – Anticipated damages agreed prior to contract being

signed.o Nominal – Award to proved legal injury but no actual damages

caused.o Punitive – Damages in excess of losses suffered in order to

punish party for breach.o Speculative – Damages awarded not on fact but on expectations

from contract fulfillment.

Specific Performanceo Ask court to order the other party to do what they agreed to do.o Subject matter must be unique in nature.o Which of the following is unique?

• Real Estate• Stocks of General Electric• ’65 Ford Mustang with 44,000 miles• A brand new Ford F-150• Dozen Eggs

Court order that prevents a party from performing an act. Temporary or permanent. Violators are in contempt of court.