2Objective:Understand contractual obligations and their enforcement.
3Transfer of Contract Rights and Duties Assignment: A transfer of a right a party may have under a contract to another.Assignor: The party who transfers the contractual right.Assignee: The party who receives the contractual right.
4Transfer of Contract Rights and Duties Obligor: The party who owes a duty under the contract.Performance: The fulfillment of contractual promise as agreed.
5Discharge of Contractual Obligations Discharge: the termination of duties that ordinarily occurs when the parties perform as promised.Breach of Contract: Failure to perform a contract as promised.Substantial Performance: Occurs when just about all of the duties are performed, but a minor duty under the contract remains.
6Discharge of Contractual Obligations Defaults: fails to perform the contract duties.Anticipatory Breach: When one of the parties contacts the other party that he/she will not be able to perform their duties.
7When the parties prepare their contract, they may agree to terminate the contract… 1. on a specific date or upon the expiration of a specific period of time.2. upon the occurrence of specific event.3. upon the failure of a specific event to happen.4. at the free will of either party upon giving notice.
8By Subsequent Agreement There are four main ways the parties may later mutually agree to change either the terms of the contract or the nature of their relationship.
9By Subsequent Agreement Rescission: The parties may agree to unmake or undo their entire contract from its very beginning.Substitution: The parties decide to replace the original contract with a new contract.
10By Subsequent Agreement Accord and Satisfaction: discharges the previous contractual obligation.Novation: A party entitled to receive performance under a contract may release the other party from the duty of performance and accept a substitute.
11By Impossibility of Performance Escape hatch: Language in a contract that permits modifications, or even termination, of performance without liability for damages in the event of an inability to perform on schedule because of specified conditions.
12By Operation of LawAlteration: A material change in the terms of a written contract without the consent of the other party.
13To discharge a contract, the alteration must be: Material, thus changing the obligation in an important way.Made intentionally, and not by accident or mistake.Made by a party to the agreement, or by an authorized agent.Made without consent of the other party.
14By Tender of Performance Tender: A ready, willing and able offer to perform an obligation.
15Remedies Possible for Beach Remedy: The legal means by which a right is enforced or a right’s violation is prevented or redressed.
16If the breach is considered a major breach, then… 1. The injured party need not continue performing the duties defined in the contract.2. Rescission or restitution. Canceling the contract and returning whatever has been received under it.
17If the breach is considered a major breach, then… 3. Money damages. The payment of money to compensate for injury.4. Specific performance. A court order commanding the breaching party to perform what was promised in the contract.
18Rescission and Restitution Rescission: Allows the parties to treat the contract as cancelled.Restitution: Permits each party to recover money or property given to the other party.
19Money DamagesCompensatory: Seeks to restore the injured parties to the same financial position they were in prior to the beach.Consequential: Seeks to restore the injured parties to the same financial position they were in if the contract had been performed.
20Money DamagesPunitive: Money damages added to the original money damage award. This is used as a punishment for the fraud or intentional tort.Liquidated: Parties to a contract agree on a certain amount of monetary damages that will be paid if a particular contract breach occurs
21Money DamagesNominal: When a party fails to perform a duty under a contract an no substantial harm has resulted, a court will still award a token amount called nominal damages.Granted in recognition of the rights that have been violated.Specific Performance: Occurs when the only appropriate remedy for a breach of contract is to decree (order) that the breaching party do exactly what is required under the contract.
22Money DamagesMitigate the Damages: A legal term used when a party injured by a breach of contract is required by law to take reasonable steps to minimize the harm done.Waivers: A party to a contract intentionally and explicitly gives up a contractual right.
23Money DamagesStatue of Limitations: Time limit set by state law setting a time limit for seeking any remedy after a legal claim, such as breach of contract.Bankruptcy: Permits the discharge (or excusing) of debts.