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Business Law
Principles
and Practices 8e
Arnold J. Goldman William D. Sigismond
Chapter 13: The Termination of Contracts: Discharge
How Contracts End
Contracts end (terminate) in either of two ways:
Discharge
Breach of contract.
(Termination by breach is the subject of Chapter 14.)
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How Contracts End by Discharge
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Discharge by Performance
Contracts usually terminate this way.
Tender of performance: offer to perform obligations of a contract.
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Degrees of Performance
Full performance: when both parties do all they agreed to do under a contract.
Substantial performance: performance in good faith of all but the minor details of a contract.
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Discharge by Agreement of the Parties
Recission.
Novation.
Accord and satisfaction.
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Rescission
Rescind: to cancel a contract and return parties to the position that existed prior to the making of the contract.
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Novation
Novation: substitution of a new party for one of the original parties to a contract.
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Accord and Satisfaction
Accord: agreement to accept performance different from that in original contract.
Satisfaction: performance of the terms of a new agreement resulting from an accord.
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Substitute Contract
Substitute contract: new contract entered into to replace a contract before a breach occurs.
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Discharge by Operation of Law
Impossibility or impracticability.
Bankruptcy.
Statute of limitations.
Material alteration of a written contract.
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Objective Impossibility
Objective impossibility: performance becomes absolutely impossible and therefore unavoidable because of some extreme difficulty.
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Objective Impossibility
Destruction of the subject matter of the contract.
Death, serious illness, or other incapacity in a personal services contract.
Change in the law.
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Commercial Impracticability
Commercial impracticability: doctrine recognizing those unanticipated events in which performance, while still possible, creates a hardship for the party obligated to perform and as a result discharges the contract.
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Statute of Limitations
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Material Alteration of a Written Contract
Alteration: deliberate material change in a contract by one party without consent.
© 2011 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.
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