B Law ch 13

waiver

voluntary acceptance of inadequate performance, or a pattern of conduct which implies a waiver of a breach of contract

6 ways duty of performance is discharged

1. Complete performance 2. material breach 3. occurrence of failure of condition 4. agreement of parties 5. discharge by operation of law 6. compliance with court ordered remedy

3 things affecting materiality of breach

1. a satisfaction clause can make an immaterial breach material 2. a "time is of the essence" clause, in those exact words can make an immaterial breach material 3. an anticipatory repudiation is considered a material breach

4 types of impossibility

1. death or incapacity of an essential part 2. destruction of the subject matter of contract - for example by fire 3. intervening illegality - the agreement becomes illegal between the time it is entered and the time performance is complete 4. unforeseeable change

discharge by operation of law

A. bankruptcy B. statute of limitations C. Alteration D. 4 types of impossibility

unforeseeable change

a) commercial frustration (common law) - a drastic, unforeseeable change in the circumstances makes performance impossible b) commercial impracticability (UCC sales) - an event occurred which parties assumed would not occur as basic part of contract - the event has an extreme effect on performance

"time is of the essence" clause

a) generally a reasonable time delay is an immaterial breach or not a breach at all b) stating the exact words: "time is of the essence" clause converts an immaterial time delay into a material breach

satisfaction clause

a) if the contract is a matter of taste, then complete personal satisfaction is required b) if the contract is a matter of function, then reasonable satisfaction is required

anticipatory repudiation

a) one party informs the other that he will not perform the contract prior to the time performance is due b) considered a material breach, even though there would have been time remaining for performance

substantial performance

a) performance where there is an immaterial breach b) is a partial discharge of the performing party, performing party may still collect on the contract but the other party is entitle to a reduction of payment

accord & satisfaction

an agreement (accord) by one party to accept a performance which is different from that required by the contract, followed by the completion (satisfaction) of that performance by the other party

voluntary rescission

an agreement by the parties to cancel the contract

novation

an agreement by the parties to cancel the old contract and enter a new one

condition precedent

an event must happen before a contractual duty arises example: collision claim, bonus incentive

compliance with court ordered remedy

breach of contract suit followed by judgement and payment

bankruptcy

cancels (discharges) most debts of the bankruptcy debtor exceptions: student loans, child support, and recent taxes

condition subsequent

contractual duty is relieved after an event example: notification of drought

concurrent condition

each party's duty conditioned on the other's simultaneous performance

alteration

intentional material alteration by one party discharges the other

material breach

one which is important in light of the entire contract

consequences of material breach

the nonbreaching party's duty of performance is discharged

reasonable expectations test

the performing party under a service contract is released due to complete performance when he meets the reasonable expectations of the other party in light of the entire contract

immaterial breach

unimportant in light of the entire contract - breaching party still has substantially performed and may sue on the contract

statute of limitations

when the time period set by statute for filing a type of lawsuit expires, the breaching party's obligation is cancelled contract becomes unenforceable