1. BELL QUIZ ON CHAPTER 11
What is it called when a contract has been properly and completely carried out?
What does the court ask when determining if the job was completed in a satisfactory manner?
Name one of the three situations for impossibility of performance.
Name one debt that cannot be discharged under bankruptcy law.
True/False – Legal tender includes checks and credit cards.

2. Reasonable Person Test
ANSWERS TO BELL QUIZ
Complete Performance
Reasonable Person Test
a) Death or illness b) destruction of subject matter c) illegality
a) education b) taxes c) alimony d) child support e) maintenance payments
False

3. Section 12.1

4. Why It’s Important
Understanding when contractual rights and duties can be assigned will prepare you to deal with such situations when they arise.

5. Transfer of Rights Recall that when individuals enter contracts, they:
receive rights (benefits)
incur duties (detriments)

6. Transfer of Rights
Rights and duties may be transferred legally from the original parties to someone new, as long as the contract does not specifically say you can’t.

7. Transfer of Rights
The transfer of a right under a contract is called an assignment.
The party who transfers the right is the assignor.
The party to whom the right is transferred is the assignee.

8. Transfer of Rights 12.1 Anthony had a contract with Cathy to rebuild
her front steps
for $1,800.
Anthony owed
his landlord
$1,800.
He therefore
assigned his
right to the
$1,800 to his
landlord.
When payment
was due, Cathy
paid the $1,800
to Anthony’s
landlord.

9. How Rights May Be Assigned
The law does not specify how one party may assign a right to another.
However, it is best to put an assignment in writing, because an oral assignment can be difficult to prove.

10. What Rights May Be Assigned
Most rights may be assigned unless the assignment changes the obligations of the other party to the contract in an important way.

11. What Rights May Be Assigned
Rights to the payment of money and the delivery of goods are the most common types of rights that are assigned.

12. What Rights May Be Assigned
Generally, no special form is required to make an assignment.
Any words that clearly indicate a person’s intent are sufficient.

13. Transfer of Duties
The transfer of a duty is called a delegation and should not be confused with an assignment, which is a transfer of rights.

14. Transfer of Duties
In a transfer of duties, a party to a contract delegates another person to perform the obligation in his or her place.

15. Transfer of Duties
Although the performance of an obligation may be delegated, the responsibility for it may not.
Subcontracting is a form of delegating.

16. Transfer of Duties The following duties may not be delegated:
A party agrees to perform the service personally.
The contract calls for the exercise of personal skill and judgment.
The contract prohibits delegation.

17. Transfer of Duties 12.1 Ivan has a contract to print the PTA
newsletter but
cannot do it.
Ivan transfers
his duty to
ABC Press.
ABC Press
prints the PTA
newsletter.
Ivan is still
liable for the
terms of the
contract.
The PTA pays
Ivan and Ivan
pays ABC
Press.

18. (Added Slide Not On Notes)
You don’t need the permission of the other party to assign contract rights or to delegate duties to a third person.

19. Novation
If you receive permission to assign contract rights or delegate duties to a third person, and the other party agrees to deal with the assignee, the resulting contract is called a novation.

20. Novation
A novation is an agreement whereby an original party to a contract is replaced by a new party.
The terms of the new contract generally remain the same as those in the original contract.

21. Novation
To be effective, substitution requires the consent of all of the parties involved.

22. Third Parties
A contract is a binding agreement that establishes a relationship between the parties to the contract.
This relationship between the parties is termed privity of contract.

23. Third Parties
Privity of contract determines who can sue whom over a question of performance required by a contract.
Usually the parties to a contract have standing to sue.

24. Third Parties
A person who is not a party to a contract but still benefits from the contract is called a third-party beneficiary.
Example 10 - page 249
End of Section 12.1

25. Section 12.2
REMEDIES OF
THE INJURED PARTY

26. THE GOOFED UP WEDDING GIG VIDEO

27. Breach of Contract
A breach of contract occurs when one party to a contract fails to perform the duties set out in the terms of the agreement.

28. Breach of Contract
Sometimes parties to a contract notify the other that they will not go through with the contract before the time for performance.

29. Breach of Contract
They have breached, or violated, the agreement before they were required to act.
This is called anticipatory breach.

30. Damages
When a contract is breached, the injured party has a choice of remedies.
A remedy is a legal means of enforcing a right or correcting a wrong.

31. Damages The injured party has three options: accept the breach
sue for money damages
ask the court for an equitable remedy

32. Acceptance of Breach
If one party breaches a contract, the other party has an excuse not to perform and may simply accept the breach and consider the contract discharged.

33. Money Damages
Damages are payment recovered in court by a person who has suffered an injury.

34. Money Damages
If you suffer a loss as the injured party, you may sue for money damages resulting from the breach of contract.

35. Money Damages
The money damages should, by law, place you in the position you would have been in if the contract had been carried out.

36. Money Damages
To recover damages, the injured party must make tender; that is, the injured party must offer to do what he or she agreed to do under the contract.

37. Money Damages Categories of damages include: Actual Liquidated
Compensatory
Nominal
Consequential
Punitive
Incidental
Speculative
Figure 12.3 – page 252

38. Actual and Incidental Damages
Actual damages are damages directly attributable to another party’s breach of contract.

39. Actual and Incidental Damages
If a seller of goods breaches a contract, the measure of damages for the buyer is the difference between the market price at the time of the breach and the contract price, plus incidental damages.

40. Actual and Incidental Damages
Incidental damages are any reasonable expenses, resulting from a breach, that have been incurred by the buyer.
Example 12 – page 251

41. Liquidated Damages
Damages agreed upon by the parties when they first enter into a contract are called liquidated damages.
Example 13 – page 252

42. Minimizing Damages
The principle of mitigation of damages states that even if you are the innocent party, you must try to minimize damages that might result from the other party’s failure of performance.

43. Minimizing Damages
By minimizing damages, the innocent party is protecting the other party from any unnecessary losses.
Example 14 – page 253

44. Equitable Remedies
The remedy of money damages is not always enough to repay an injured party for breach of contract. In these cases, the injured party may seek an equitable remedy.

45. Equitable Remedies Two equitable remedies are: specific performance
an injunction

46. Specific Performance
When the remedy of money damages is not enough to repay a breach of contract, one party may sue the other for specific performance.

47. Specific Performance
Specific performance means asking the court to order the other party to do specifically what he or she originally agreed to do.
Example 15 – page 253

48. Injunction
An injunction is a court order that prevents a party from performing an act of some sort.
Example 16 – page 255

49. Injunction An injunction
is only available in special circumstances, such as when money damages are inadequate compensation.
may be temporary or permanent
End of Section 12.2