Performance and Discharge of Contracts in Texas

Novation of contract

Occurs when a new contract is created for the same purpose as a previous contract but with all previous contract edits and amendments incorporated.

Mutual rescission:

Okay, this contract isn't working out for either of us. Let's put it in writing that we've agreed to call it quits.

Partial Performance Definition

One or both parties have completed only a portion of the terms agreed to in the contract.

Which of these constitutes a breach of contract?

One party fails to meet the obligations of the contract.

Substantial Performance

One party has met most—but not all—of the terms specified in the contract, and may be required to pay damages for the terms not met.

What Does Assignment of Contract Mean?

To substitute a new party for one of the original parties stated in the contract

Impossibility of Performance

Due to circumstances out of their control, the parties cannot legally or practically do what they've agreed to do.

T or F: Partial performance always results in termination of the contract.

False

Unilateral rescission:

Fine, if the other party is not going to meet his obligations, I'm going to terminate.

What does "performance of a contract" mean?

Meet all of the terms of a contract.

Statue of Limitations

The statute of limitations is a law that states that, if legal remedy is sought against a person, the pursuer must bring a court action within a specified period of time

Liquidated damages:

Things just aren't working out, so I'm going to cut my losses and accept liquidated damages per our agreement because you didn't hold up your end of the deal.

T or F: Impossibility of performance occurs when the property is destroyed, or is made the subject of eminent domain.

True

T or F: In impossibility of performance situations, the parties are released from their contractual obligations.

True

T or F: In substantial performance situations, the offending party may be required to compensate the other party for damages, resulting from incomplete performance of the contract terms.

True

T or F: In the event that the new party fails to live up to the obligations stated in the contract, the original party remains responsible to the terms of the agreement unless specifically stated otherwise in the contract.

True

T or F: Partial Performance can still be valid if the other party is willing to waive the unmet terms.

True

T or F: When assigning a contract, the assignor should also check off any "contract is assignable" clause that is part of the purchase contract.

True

T or F: Specific performance requirements can be satisfied through property or monetary damages.

False

T or F: The request to assign a contract is most often made prior to an offer being made to purchase the property.

False (Made at the time of the offer)

n Texas, a party to a contract has__________ years from the date of a contract breach to sue the other party.

Four

Sue for specific performance:

Hold on just a minute! You're not getting off that easy. With the help of the courts, I'm going to make sure you fulfill the terms of our contract.

Sue for monetary damages:

All right, then. If you don't want to fulfill your obligations through actions, with the court's help, I'll take out what you owe me in cash and call it even.

Accept partial performance:

Although you haven't met all of your obligations, I'm willing to move forward with the contract anyway.

What does the phrase "time is of the essence" mean with regard to a real estate contract?

The parties agree to proceed in good faith and not unduly delay the process.

When a breach of contract occurs, the aggrieved party can remedy the situation in four of these ways. What options does the wronged party have?

-Accept partial performance -Sue for specific performance -Sue for damages -Mutually rescind the contract

Which three of the following statements indicate who has the right to terminate a breached contract?

-Both parties can agree to terminate the contract. -The innocent party can terminate the contract. -The guilty party can terminate the contract with aggrieved party's permission.

Operation of Law

Operation of law is the manner in which an individual acquires rights or liabilities automatically due to law, and not through an agreement or act of their own