Presentation on theme: "ES 2 UNDERSTAND CONTRACT LAW Obj. 2.02 Understand terminating, transferring, and breaching a contract."— Presentation transcript:
ES 2 UNDERSTAND CONTRACT LAW Obj Understand terminating, transferring, and breaching a contract.
Terminating a Contract
Discharge by Performance Complete –All terms have been carried out properly and completely. Time –Court will honor time request, if it is deemed of the essence. –If not mentioned in contract, then a reasonable time will be assumed.
Satisfactory –Law requires that services be completed in a satisfactory manner. –Reasonable person test Would a reasonable consider the work to done in satisfactory manner? Substantial –Slightly less than full performance Must meet the following rules: –Acted in Good Faith –Completed Major Components of Contract –Only Minor Details Incomplete.
Tender of Performance –Tender – Offer to Perform –Must make tender even if you know the other party will not perform their part of the contact.
Discharge By Agreement Mutual Release (Rescission) –Each side releases the other side from the contract. Accord and Satisfaction –Substitute one contract for another.
Discharge By Impossibility of Performance Death or Disability –Only allowed in Personal service contracts. –What is personal service? Photographer Artist –Any other contract must be completed.
Destruction of subject matter –If the subject matter is essential to the contract then it will be discharged. Performance becomes illegal –Any illegal contract is void.
Discharge by Operation of Law Wrongful Alteration –Any altering or changing of a contract will discharge parties to the agreement. Statute of Limitations –Individual states have a time limit on lawsuits to be filed. –What is the only crime/tort that doesnt have a time limit?
Discharge by Operation of Law Bankruptcy –Debtors can be discharged from contracts after filing for bankruptcy.
Transferring a Contract Assignment Delegation Novation
Assignment Legally transferring your RIGHTS in a contract. –Assignor – party who transfers the right. –Assignee – party to whom the right is transferred. No consideration needed. Must not change the obligations in the contract. Must be a RIGHT not a DUTY. Assignor is responsible for contract fulfillment.
Delegation Transfer a duty. Delegating party is still responsible for the contract being fulfilled. Contracts that CANNOT be delegated: –Promise to perform service personally. –Exercise of personal skill or judgment. –Contract prohibiting delegation.
Novation Replacing a party to a contract with a new one. The other terms to the contract remain the same.
Breaching a Contract Wrongful failure to perform one or more promises in a contract. Anticipatory Breach –Notified that a party to the contract will not fulfill their part of the contract prior to the required time of fulfillment. –Lawsuit may be filed early in this case. Exception to the rules: Refusal to pay money owed at a future date.
Remedies for Breach Acceptance of Breach –Accept the breach of contract and discharge the other party without asking for damages. Why? Rescission and Restitution –Canceling the contract and returning anything that has been received
Money Damages –Actual – Damages DIRECTLY related to breach. –Compensatory – Award only for injuries suffered nothing more. –Consequential – Damages that DO NOT flow directly from breach. –Incidental – Reasonable expenses that INDIRECTLY from breach of contract. –Liquidated – Anticipated damages agreed prior to contract being signed. –Nominal – Award to proved legal injury but no actual damages caused. –Punitive – Damages in excess of losses suffered in order to punish party for breach. –Speculative – Damages awarded not on fact but on expectations from contract fulfillment.
Specific Performance –Ask court to order the other party to do what they agreed to do. –Subject matter must be unique in nature. –Which of the following is unique? Real Estate Stocks of General Electric 65 Ford Mustang with 44,000 miles A brand new Ford F-150 Dozen Eggs
Injunction Court order that prevents a party from performing an act. Temporary or permanent. Violators are in contempt of court.