business law part 3

Remedies: 1. Compensatory and Nominal Damages

Actual or compensatory damages is an amount that places the injured party in the same position he/she would have been if there had not been a breach, including any damages that was the natural and probable consequence of the breach- however, that may not be speculative or hypothetical at ay time before performance is due, provided that innocent party has not yet tracked the reputation of a breach ♣ May not be speculative

contractual breach: Anticipatory Repudiation

Occurs when one of the parties in clear and unequivocal terms indicated that he does not intend to render the contractual performance when it is due o As a general rule, the doctrine of anticipatory repudiation only pply to executory bilateral contracts o Innocent party has three options: ♣ (1) sue immediately for the breach ♣ (2) do nothing until the time for the performance arrives and then seek damages ♣ (3) rescind the contract and recover the value of any performance rendered by him o May be withdrawn at any time before performance is due, provided the innocent party has not yet treated the repudiation as a breach

contractual breach

One of the major purposes of a contract is to provide a remedy for the innocent party if he/she is injured as the result of a contractual breach

discharge by performance

One the required performance is completed, the party is discharged

2. subsequent unforeseeable events

The General Rule is: SO called acts of God, or even unavoidable accidents rendering performance impossible will not allow one to escape liability for damages, absent a contractual provision excusing performance under such circumstances. Exceptions to General Rule: Destruction of the Subject matter - When the subject matter of a contract is destroyed so that performance of the contract is impossible, the contract will be discharged. Ex: Painting beach house (hurricane blows it away)

5. prevention by act of party

There is an implied condition in every contract that a party will do nothing to interfere with performance by the other. When one is prevented from performing by the other party, he may treat this as a breach of contract and sue for damages

time of performance

Usually, failure to perform on time will not discharge the other party from performing, unless the parties consider "time to be of the essence", in which case failure to perform on the time will create a discharge. Whether "times is of the essence" is matter for the court (intentions of the parties), on a case by case basis. Best to put it in the contract. If no time for performance is stated in the contract, time for performance is "within a reasonable time"

doctrine of partial performance

When a portion of the required performance is not completed, generally intentionally. When innocent party has done nothing to prevent full performance and has not waived his/her right to full performance, there can be no recovery under the contract However, if the innocent party accepts the benefits of a partially performed contract he/she waived right to full performance and must pay the reasonable or fair valued of the performance accepted

remedies: 6. recision and reformation

When a written contract does not accurately reflect the actual agreement of the parties. A court may reform the contract so that the agreement correctly states the parties' intent.

Discharge by operation: 1. merger

When contract rights are merged into a greater right. The contract is discharged, but the parties will still have the greater right. • Ex: contract to purchase real estate- closeds- deed.

Discharge by agreement: 3. waiver

When one does not exercise the rights that he/she has under a contract, they are said to have waived them

Discharge by operation: 3. bankruptcy

When the bankruptcy court signs a discharge of a debt, the bankrupt is discharged from performance

conditions concurrent

When the parties under a contract are required to perform simultaneously ♣Ex: Farmer agrees to sell 100 bushels of corn to retailer for $10 per bushel, payment on delivery. The delivery of the corn and the payment take place simultaneously

Remedies: 3. liquidated damages

When the parties, in their contract, stipulate the specific amount of damages to be paid should there be a breach ♣ Court will permit, if amount is not so large as to constitute a penalty, and if there is some reasonable probability that the actual damages could total the amount specified.

discharge by operation: 4. statue of limitations

When the period elapses, any lawsuit is barred. A number of events may stop the statue of limitations from running, When this happens, the running of the statue is said to be "tolled". A partial payment on a debt will toll the statue of limitations and it will begin running from the date of the partial payment

performance to satisfaction of promise

Without a specific contractual provision, one may not refuse to pay for contractual performance on the sole ground that he/she is not satisfied with the results, except contracts involving one's personal taste, or, in some cases involving mechanical utility On occasion, the acceptance of contractual performance may be subject to the approval of a third person (architect) are generally valid and enforceable

conditions

oA condition is a clause in a contract that will shift, suspend, modify , or rescind an obligation based upon some operative fact pr event oMay be express, implied in fact, or implied in law oExpress conditions may be either conditions precedent, conditions subsequent, or conditions concurrent

Remedies: 5. Non monetary damages

situations in which is it not possible to affect a remedy by an award of money. ♣ Specific Performance: The court will allow specific performance of a contract only when the subject matter is simple ♣ Injunction: An order issued by a court requiring a person to do something or prohibiting them from doing something

3. Death or incapacity of the Parties

the death of a party may discharge a contract is it is one for personal services or involves personal skill or a special relationships with the other party. If the services are such that they might be provided by a personal representative, then the contract is not discharged. • Change in Law: When a change in the law renders performance illegal and impossible, the contract is discharged

performance and discharge

there are a number of legal concepts that may result in the termination or discharge of the parties' obligations under a contract

4. Frustration of Purpose:

when circumstances arise subsequently to the creation of the contract that makes performance fruitless and hen the purpose of both parties to the contract cannot be accomplished, the contract will be discharged. Although a literal performance of the contract might be possible , it will not be required of the purpose of the contract has been destroyed or frustrated. • Ex: Hotel Reservations for parade

Remedies: 2. Punitive or exemplary damages

♣ Assessed against a defendant beyond that amount necessary to compensate the plaintiff for the injuries suffered by him/her ♣ Awarded in civil cases when there is malice or vindictive behavior shown on the part of the defendant ♣ Awarded in addition to any compensatory or normal damages ♣ Awarded in civil cases when there is malice or vindictive behavior shown on the party of the defendant

Remedies: 4. Duty of mitigation

Duty to keep the amount of loss sustained to a minimum. A party may have a duty to take positive steps on order to mitigate his damages. Ex: Lease

Discharge by operation: 2. Alteration

If one party willfully and intentionally alters an agreement in a material respect without the consent or approval of the other party, the contract will be discharged

Discharge by Impossibility of Performance and Frustration of Purpose

If performance of a contract is physically or legally impossible at the time of its making, neither party is liable.

tender of performance

-Simply offering to render the performance due under the contract -Necessary in order to fix the other party's liability when performances are concurrent -May also be a defense -Tender, in order to be effective against a creditor, cannot be made before the due date -A creditor may refuse to accept a check on the ground that is not legal tender. If accepted, the tender is conditional upon payment -If one's contractual obligation consist of paying money, an offer to pay the debt when due has several effects if acceptance is refused by the creditor. Although the debt will not discharge,: (1) the interest will stop running as of the date of tender (2) any security interest in property securing the debt will be extinguished, and (3) the debtor is relieved from payment of Court costs should the creditor subsequently sue

contractual breach: materiality

A breach of a contract occurs when a party fails to perform one of the duties or conditions of the agreement. If the breach is material or total, the innocent party may rescind the agreement and sue for damages. If the breach is partial, the innocent party may not rescind the contract and must still perform his/her promise - the remedy is to bring an action for damages caused by partial breach. o A material breach is one that goes to the essence of the contract. Whether or not a breach goes to the essence of the contract is a matter for the court to determine from the intentions of the parties. (performance can be done separately) or entire (performance are dependant upon each other). Whether or not the contract is servable or entire is again determined the finding of the court as the intentions of the parties. (Just put intentions in the contract)

condition precedent

A specific condition that must occur before the agreement between the parties can become binding or before a party is required to perform a duty or obligation under the contract. ♣Frequently used to shift the risk that a certain event will or will not occur from one party to another Ex: Manufacturer enters into a contract with Clother, the terms of which provides that Manufacturer is to ship 100 pair of slacks at $10 per pair, "ninety days after Manufacture receives the necessary cloth from supplier" oWhat is the condition precedent? (receipt of cloth) oOften an event that must occur prior to or proceeding a contractual obligation

discharge by agreement: 4. accord and satisfaction

An accord occurs when the parties agree to performance different than that specified in the contract. Once the accord is performed, the original agreement is discharged by the accord and satisfaction • Ex: Agree to paint offices rather than Home

conditions subsequent

An event that occurs after or subsequent to the point in time when one is obligated under a contract ♣Operated to cut off contractual liability Ex: Goods sold under a "sale or return " policy. Retailer purchases watches on "sale or return" policy

Doctrine of Substantial Performance:

Applicable where full and exact performance of every detail of the contract has not been rendered but where there has been a good-faith attempt to perform the agreement, resulting in substantial compliance. When applicable, the party substantial performing under the contract is entitled to recover but subject to the right of the innocent party to be compensated for the damages occasioned by the defects in performance, but not excused from performance - Ex: Contraction Contract

1. subsequent foreseeable events

No discharge unless a clause excusing performance under such circumstances is in the contract

Discharge by agreement: 2. substituted contract and novation

The parties may agree to substitute one contract for another which discharges the obligations under the pervious contract. A Novation occurs when effect by agreement one party is substituted for another under terms of the same contract- has the effect of discharging the original party

Discharge by agreement: 1. mutual recision

The parties to a contract may discharge themselves from that contract by a subsequent agreement