Essentials Of Business Law Chapter 13 Discharge Of Contracts McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Essentials of Business LawChapter 13-2 Termination By Agreement A contract may provide for its termination either:  After a certain period of time  Upon the occurrence of a certain event Contracts may also be terminated by mutual agreement of both parties

Essentials of Business LawChapter 13-3 Termination By Performance Complete and satisfactory performance Substantial performance  All terms and conditions are executed with the exception of minor details  No materially affect on the intent of the agreement Performance by payment of money  Not complete until the amount agreed upon has been paid

Essentials of Business LawChapter 13-4 Tender Of Performance An offer to perform Evidence of a party’s willingness to fulfill the terms of a contract Refusal of a tender of performance  Relieves party making the offer of obligation to perform  May sue the other party for breach of contract

Essentials of Business LawChapter 13-5 Tender Of Goods An offer to provide goods agreed upon Evidence of a party’s willingness to fulfill the terms of a contract Refusal of a tender of goods  Relieves party making the offer of obligation to provide goods  May sue the other party for breach of contract

Essentials of Business LawChapter 13-6 Tender Of Payment An offer of money in payment of an obligation Evidence of a party’s willingness to fulfill the terms of a contract Refusal of a tender of payment does not cancel the debt  Penalties and interest cannot be charged beyond the date of the offer of payment

Essentials of Business LawChapter 13-7 Valid Tender Must be made as specified in the contract Tender of payment must be for the exact amount Tender of goods must be for the specific goods specified in contract

Essentials of Business LawChapter 13-8 Impossibility Of Performance Unforeseen circumstances may make a contract impossible to fulfill  Voids contract  Parties are discharged from obligations Death of disabling illness  Voids personal service contracts requiring special skill or talent Frustration of purpose  When reason for contract no longer exists, through no fault of either party  Terminates contract

Essentials of Business LawChapter 13-9 Termination Of Contracts Material alteration  A deliberate change of an important element in a written contract  Affects the rights or obligations of the parties Operation of law  When a law is passed after the parties enter into a contract that makes performance illegal

Essentials of Business LawChapter Breach Of Contract When a party to a contract refuses to perform as required by the contract When a party performs in an unsatisfactory manner Three common ways contracts are breached:  Anticipatory breach  Breach resulting from a deliberate or negligent act  Failure to perform an obligation

Essentials of Business LawChapter Termination To Protect Consumers Various laws and regulations allow consumers to terminate a contract under certain conditions Federal Consumer Credit Protection Act  Applies to contracts that require consumers to pledge their home as a security deposit  Gives consumers the right to cancel a credit transaction within three days Federal Trade Commission  Gives the consumer a “cooling-off” period of three days  Consumer has the right to cancel contracts for either goods or services made in the consumer’s home

Essentials of Business LawChapter Remedies For Breach Of Contract Injured party may sue for an amount of money that will compensate for the loss  Injured party must determine the damage in terms of money  The court will determine if the claim is fair and adequate Injured party may sue for specific performance  A court order directing a person to perform as he or she agreed to do Restraining order or injunction  A court order prohibiting the performance of a certain act