Business Law and Ethics Questions !
Blacksmith G
Mann_Essentials13e_PPT_Ch17.pptxChapter 17
Performance, Breach, and Discharge
Chapter 17 Title Slide
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Topics Covered in Chapter 17: Performance, Breach & Discharge
A. Conditions
B. Discharge by Performance
C. Discharge by Breach
D. Discharge by Agreement of the Parties
E. Discharge by Operation of Law
2
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2
Conditions
Definition of a Condition – an event whose happening or nonhappening affects a duty of performance.
Express Condition – contingency explicitly set forth in language.
3
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3
Conditions
Satisfaction of a Contracting Party – express condition making performance contingent upon one party's approval of the other's performance.
4
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4
Conditions
Satisfaction of a Contracting Party
Subjective Satisfaction – approval based upon a party's honestly held opinion.
Objective Satisfaction – approval based upon whether a reasonable person would be satisfied.
Satisfaction of a Third Party
5
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5
Conditions
Implied-in-Fact Conditions – understood by the parties to be part of the agreement, though not expressed.
Implied-in-Law Conditions – contingency not contained in the contract but imposed by law (constructive condition).
6
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
6
Conditions
Concurrent Conditions – the mutual duties of performance are to take place simultaneously.
Conditions Precedent – an event that must occur before performance becomes due.
Conditions Subsequent – an event that terminates duty of performance.
7
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
7
Discharge by Performance
Discharge – termination of a contractual duty.
Performance – fulfillment of a contractual obligation resulting in a discharge.
8
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8
Discharge by Breach
Breach – wrongful failure to perform terms of a contract that gives rise to a right to damages by the injured party.
Material Breach
Nonperformance that significantly impairs the injured party's rights; discharges the injured party from any further duty under the contract.
9
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
9
Discharge by Breach
Material Breach
Prevention of Performance – one party's substantial interference with or prevention of performance by another; discharges the other party.
10
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10
Discharge by Breach
Material Breach
Perfect Tender Rule – standard under the UCC that a seller's performance under a sales contract must strictly comply with contractual duties and that any deviation discharges the injured party.
11
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11
Discharge by Breach
Substantial Performance – incomplete performance that does not defeat purpose of the contract; does not discharge injured party but entitles him to damages.
12
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12
Discharge by Breach
Anticipatory Repudiation – an inability or refusal to perform, before due; treated as a breach, allowing the nonrepudiating party to bring suit immediately.
13
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
13
Discharge by Breach
Material Alteration of Written Contract – a material and fraudulent alteration of a written contract by a party to the contract; discharges the entire contract.
14
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
14
Discharge by Agreement of the Parties
Mutual Rescission – an agreement between the parties to terminate their respective duties under the contract.
Substituted Contracts – a new contract accepted by both parties in satisfaction of the parties' duties under the original contract.
15
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
15
Discharge by Agreement of the Parties
Accord and Satisfaction – substituted duty under a contract (accord) and the discharge of the prior contractual obligation by performance of the new duty (satisfaction).
Novation – a substituted contract involving a new third-party promisor or promisee.
16
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
16
Discharge by Operation of Law
Impossibility
Subjective Impossibility – promisor cannot perform, but performance is not truly impossible; does not discharge promisor.
Objective Impossibility – promisor cannot perform because performance is truly impossible; generally discharges promisor.
17
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
17
Discharge by Operation of Law
Impossibility
Subsequent Illegality – performance becomes illegal or impractical as a result of a legal change; duty is discharged.
Frustration of Purpose – principal purpose of a contract cannot be fulfilled because of a subsequent event.
18
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
18
Discharge by Operation of Law
Impossibility
Commercial Impracticability –performance can be accomplished only under unforeseen and unjust hardship; contract is discharged under the Code and the Restatement.
19
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
19
Discharge by Operation of Law
Bankruptcy – discharged if debtor obtains an order of discharge by the bankruptcy court.
Statute of Limitations – time limit for bringing legal action; debt is not discharged, but a creditor cannot bring an action against debtor.
20
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
20
Discharge of Contracts
21
© 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
21
