How Contracts Come to an End

1. How Contracts Come to an End Chapter 11

2. Performance and Agreement Typically most contracts come to an end because parties fulfill their obligation. Parties to a contract often require performance of duties under certain time constraints and they must be satisfied with the performance of the obligations of the other party.

3. Ending a Contract When contracts eventually end, they are said to be discharged. In this section, we will see that contracts can be discharged by performance and agreement.

4. Discharge by Performance Most contracts are discharged by performance, meaning the parties fulfill the terms of the contract.

5. Time for Performance Time in a contract can be very important If there is no time specified, it must be completed in a reasonable amount of time. Generally defined as the time that is suitable, fair, and proper to the objective in view.

6. Satisfactory & Substantial Performance The law requires services be done in a satisfactory manner. All parties must fully perform their parts Exception to rule: substantial performance Slightly less than full performance

7. Tender of Performance Tender is an offer to do what you have agreed to do under contract. Example: You agree to buy a car. Making tender would be offering to pay the money at the agreed time for performance. Legal Tender – US Currency

8. Discharge by Agreement Created by mutual agreement May be terminated by mutual agreement Mutual Release – an agreement between two parties to end an agreement Accord and Satisfaction – often used to settle an honest disagreement regarding an amount owed.

9. Involuntary Discharge Some contracts come to an end despite what the parties intend or what they actually do. The two primary ways contracts are discharged are by impossibility of performance and by operation of law.

10. Discharge by Impossibility of Performance Illness that prevents the performance Death Destruction of the exact subject matter Destroyed through no fault of either party Illegality When the performance becomes illegal after the contract has been initiated

11. Discharge by Operation of Law Wrongful Alteration One of the parties alters or changes the contract Statute of Limitations A law that specifies in what time a legal action may be brought on a contract Bankruptcy Laws set procedures for discharging a person’s debt obligations

12. Pop Quiz!Identify the method of involuntary discharge below • Kim added a “0” after the date March 3 to attempt to extend the date a contract was to be completed. • Wrongful alteration • Tim was hired to paint a mural for the middle school gym one week before a tornado ripped through the school. • Destruction of exact subject matter