1. The Legal Environment of Business
A Critical Thinking Approach
5th Edition
Nancy K. Kubasek
Bartley A. Brennan
M. Neil Browne

2. The Law of Contracts and Sales - II
THE LEGAL ENVIRONMENT OF BUSINESS
CHAPTER 11
The Law of Contracts and Sales - II

3. Discharging a Contract
By Performance
By Mutual Agreement
By Conditions
By Impossibility of Performance
By Commercial Impracticability

4. Discharge by Performance
Complete Performance
Substantial Performance
Most terms completed
Honest effort
No willful departure from the terms
Only minor items not done

5. Material Breach Elements:
Note: If breach is material, the injured party may end the contract and sue for damages.
Elements:
It is a substantial breach
May also be intentional
Breaching party may usually “cure”

6. Sales of Goods
UCC Article 2 requires that goods conform to the description
Note: Where Seller ships nonconforming goods, Buyer may:
Reject all goods
Accept all goods
Accept some and reject some
Notify Seller of defects and allow cure

7. Discharge by Mutual Agreement
Rescission
Accord and satisfaction
Novation

8. Discharge by Condition
Conditions Precedent
An event that must take place in order for a contractual duty to arise
Conditions Subsequent
An event in the future which, if it takes place following execution of the contract, extinguishes the duty to perform

9. Discharge by Impossibility of Performance
Where unforeseeable events either make performance physically impossible or legally impossible, or extremely expensive to perform

10. Impossibility of Performance
Death or illness of promisor
Change in the law
Destruction of the subject matter
Commercial Impracticability
Performance is possible, but impractical due to unforeseeable costs.

11. Remedies for Breach Legal Remedies Money Damages Compensatory Nominal
Punitive
Liquidated
Incidental and Consequential
Note: In Arrowhead School district case, the liquidated damages clause was enforceable.

12. Remedies for Breach Equitable Remedies
Rescission
Reformation
Specific Performance
Injunction

13. Rescission
Definition: “Tearing up the contract” or canceling the contract
Application: In cases of fraud, duress, mistake, or undue influence

14. Reformation
Definition: Amending the terms of the contract to reflect what has later come to be known as the parties true intent
Application: In cases of clerical or typographical errors

15. Specific Performance
Definition: An order from the court directing a party to perform according the terms of the contract
Application: Usually ordered in cases involving sale of unique items where there is no available substitute for the subject matter in the contract, (i.e., land)
Note: It is a requirement for specific performance that damages at law are not adequate.

16. Injunctions
Definition: A court order directing a party to stop doing something. This may be temporary or permanent.
Application: Upon a showing that, without an injunction, there will be irreparable harm to plaintiff, and that money damages are inadequate

17. Remedies for Breach of Sales Contracts
2-702
Reclaim goods
2-708(1)
Damages where Buyer breaches
2-709(1)
Recover the purchase price
2-703(d)
Resell
2-703(a)
Withhold Delivery
2-703(f)
Cancel
Article 2 Section
Seller’s Remedies

18. Remedies for Breach of Sales Contracts
2-714(1)
Partially accept goods
2-608(1), (2)
Revoke acceptance
2-601
Right to reject goods
2-711(1)
Cancel
2-716(2)
Specific Performance
Article 2 Section
Buyer’s Remedies

19. Electronic Contracts E-signatures: Federal and State law
UCITA: Introduced in several states: enacted in only Maryland and Virginia
Addresses issues related to electronic contracts
Coverage: computer information transactions

20. International Contracts
Convention on Contracts for the International Sale of Goods (CISG)
Coverage: CISG signatory countries and others who opt in
Parties may also opt out
As a treaty, CISG is superior to state law

21. Major Differences between CISG & UCC on contract formation requirements
Offer and acceptance
Mirror image rule
Mailbox rule
Statute of frauds and parol evidence rule
Consideration

22. Summary Contracts can be discharged in several ways.
Remedies for breach can be legal and/or equitable.
There is a trend toward more uniform contract law (via the UCC and the CISG).
E-commerce has created new challenges.

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Copyright © 2009 Pearson Education, Inc.  
Publishing as Prentice Hall