Ch. 19 - Discharge of Contracts

Suit for damages

A damaged party may sue for money damages in civil court. The suit must be initiated within the time period allowed by the Statute of Limitations.

Actual breach vs Anticipatory breach.

Actual breach--where one party refuses to perform his or her side of the bargain on the due date or performs incompletely. Anticipatory breach--where one party announces, in advance of the due date for performance, that he or she intends not to perform on his or her side of the bargain. The innocent party may sue for damages immediately when the breach is announced.

Partial Performance vs. Defective Performance

Partial Performance-- when one party has failed to complete performance of an agreement according to its terms, the other party may recover such damages as will compensate him or her to the same extent as though the contract had been completely performed. Defective Performance--damages for defective performance of a contractual agreement are measured by calculating the difference in value between what is actually tendered and what is required as performance under the agreement.

What describes when one party has failed to complete performance of an agreement according to its terms and the other party may recover such damages as will compensate him or her to the same extent as though the contract had been completely performed? Partial performance Equitable performance Defective performance Complete performance

Partial performance

What occurs when a party refuses to perform his or her obligations under the contract? Renunciation Acceptance Resignation Espousal

Renunciation

Three Situations of Breach;

Renunciation-occurs where a party refuses to perform his obligations under the contract. It may be either express or implied. Breach of Condition-occurs where the party in default has committed a breach of condition. Fundamental Breach-any breach to a contract that is fundamental. Any fundamental breach permits a party to terminate the performance of a contract. This also entitles a party to sue for damages.

What is an important component of operation of law that restricts the time period for which an injured party in a contract has the right to bring a lawsuit against the other party? The Criminal Justice System Judicial scrutiny The Statute of Limitations Regulatory limitations

The Statute of Limitations

Nonperformance by a party to a contract constitutes: a breach of contract. illegal promises. defamation misrepresentation.

a breach of contract.

If there is consent for an assignment, the assignor is not released from his or her duties of a contract, unless the assignor receives: notification from the courts. a release from liability. due process. revocation.

a release from liability.

When a contract states the total amount due to a damaged party in the event of a breach, the compensation is known as: punitive damages. general damages. liquidated damages. consequential damages.

liquidated damages.

Forfeiture

requires the breaching party to give up something, according to the terms of the contract.

Infeasibility that is due to the inability of an individual promisor to perform, such as illness or death is called: objective infeasibility. unbiased infeasibility subjective infeasibility. neutral infeasibility.

subjective infeasibility.

Accord and satisfaction is another way to discharge a contract by mutual agreement that occurs when one party agrees to accept less than the original obligation outlined in the contract. The accord is the agreement between the parties to discharge the obligation and the satisfaction is: the consideration provided. legal title. the transfer of property. the liabilities of parties.

the consideration provided.

Foreseeability vs Reasonable certainty

Foreseeability-- the loss of profit incurred by the purchaser must be foreseeable, i.e. within the contemplation of parties. Reasonable certainty--the loss of profit must be proven with reasonable, not total, certainty.

What requires a breaching party to give up something, according to the terms of the contract? Forfeiture Damages Relinquishment Gain

Forfeiture

Define liquidated damages.

Liquidated damages are a predetermined amount of money stipulated in the contract to be the total amount of compensation the non-defaulting party should receive upon breach by the other party.

Common occurrences that cause default:

-Signing the contract without reading it. -Ignoring the real estate contract. -Missing the expiration date in the real estate contract. ("45 days from contract ratification.")

loss of bargain damages vs special damages.

-The standard measure of loss of bargain damages, for a total breach, would encompass the difference between the agreed contract price and the market value of the property on the date of breach. -There are two categories (expenses reliant and loss of profit) of special damages which a non-breaching party could recover. Both of these damages MUST satisfy a foreseeability test. Foreseeability in this context means such damages were within the contemplation of the contract when made.

Rescission

-cancels the contract and returns the parties to their pre-contract condition, including the refunding of any monies already transferred.

Suit for specific performance.

-is an attempt to force the defaulting party to comply with the terms of the contract. -The most common instance is a defaulted sale or lease contract

Loss of Profit

-often, purchasers tend to acquire real estate hoping to make profits from sale, rental, and/or development. In such circumstances, the purchaser might be able to recover loss of profit in addition to loss of bargain damages and expenses, articulated above.

Expenses Reliant on the Contract

-those expenses a non-breaching party incurred in reliance on the contract. Such expenses could include but are not limited to: Seller's eviction of an actual tenant Refurbishment of the premises in accordance with contract's specifications Broker's commissions Title search Examination fees Surveys

What occurs where one party announces, in advance of the due date for performance, that he or she intends not to perform on his or her side of the bargain? Actual breach Minor breach Anticipatory breach Material breach

Anticipatory breach

Discharge of a contract, also called cancellation and termination, may occur for any of the following causes:

Performance--fully performed by the parties Infeasibility--not possible to perform (Subjective infeasibility=illness or death and Objective infeasibility means that no one can render the performance) Mutual Agreement Revocation-cancellation of the contract by one party without the consent of the other Operation of Law-he rights and liabilities of parties to a contract may be changed by the application of law. Assignment and Delegation- assignment transfers rights and delegation transfers duties. Breach of Contract - Default-failure to perform according to the terms of the agreement.