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ES 2 UNDERSTAND CONTRACT LAW

ES 2 UNDERSTAND CONTRACT LAW. Obj. 2.02 Understand terminating, transferring, and breaching a contract. Terminating a contract . A contract is terminated or discharged when it comes to an end. Terminating a Contract. Contracts can be discharged voluntarily in 2 ways..

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ES 2 UNDERSTAND CONTRACT LAW

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  1. ES 2 UNDERSTAND CONTRACT LAW Obj. 2.02 Understand terminating, transferring, and breaching a contract.

  2. Terminating a contract • A contract is terminated or discharged when it comes to an end.

  3. Terminating a Contract • Contracts can be discharged voluntarily in 2 ways.. • Discharge by performance • Discharge by agreement • Some are discharged involuntarily…… • Discharge by impossibility of performance • Discharge by operation of law

  4. Discharge by Performance • Complete • All terms have been carried out properly and completely. • Time (time for completing performance) • Court will honor time request, if it is deemed “of the essence.” • If not mentioned in contract, then a reasonable time will be assumed. • A reasonable time for selling tomatoes is not the same as a reasonable time for selling a house.

  5. Discharge by performance • Satisfactory • Law requires that services be completed in a satisfactory manner. • Reasonable person test • Would a reasonable consider the work to done in satisfactory manner? • Substantial • Slightly less than full performance • Must meet the following rules: • Acted in Good Faith • Completed Major Components of Contract • Only Minor Details Incomplete.

  6. Discharge by performance • Tender of Performance • Tender – Offer to Perform (tender- attempt) • Must make tender even if you know the other party will not perform their part of the contact.

  7. Discharge By Agreement • This means that people can end a contract my mutual agreement. • Mutual Release (Rescission) • Each side releases the other side from the contract. • Accord and Satisfaction • Substitute one contract for another.

  8. Discharge By Impossibility of Performance (Involuntary) • Death or Disability • Only allowed in Personal service contracts. Only if the personal services of that person are required to fulfill that contract. • What is personal service? • Photographer • Artist • Any other contract must be completed.

  9. Discharge By Impossibility of Performance (Involuntary) • Destruction of subject matter ( If the subject matter that is needed to perform the contract is destroyed through no fault of either party, the contract is destroyed) • If the subject matter is essential to the contract then it will be discharged. • Performance becomes illegal • Any illegal contract is void.

  10. Discharge by Operation of Law • Wrongful Alteration • Any altering or changing of a contract will discharge parties to the agreement. • Statute of Limitations • Individual states have a time limit on lawsuits to be filed. • What is the only crime/tort that doesn’t have a time limit?

  11. Discharge by Operation of Law • Bankruptcy • Debtors can be discharged from contracts after filing for bankruptcy. These obligations still exist but the debtor can not be imprisoned for failure to pay. • Debts for taxes, alimony, child support, and maintenance are not affected by a general discharge of debts in bankruptcy.

  12. Transferring a Contract • Assignment • Delegation • Novation

  13. Assignment • Legally transferring your RIGHTS in a contract.(unless the contract says you can not) • Assignor – party who transfers the right. • Assignee – party to whom the right is transferred. • No consideration needed. • Best if put it writting • Must not change the obligations in the contract. • Must be a RIGHT not a DUTY. • Assignor is responsible for contract fulfillment.

  14. Delegation • Transfer a duty. • Delegating party is still responsible for the contract being fulfilled. • Contracts that CANNOT be delegated: • Promise to perform service personally. • Exercise of personal skill or judgment. • Contract prohibiting delegation.

  15. Novation • Replacing a party to a contract with a new one. • The other terms to the contract remain the same.

  16. Breaching a Contract • Wrongful failure to perform one or more promises in a contract. • Anticipatory Breach • Notified that a party to the contract will not fulfill their part of the contract prior to the required time of fulfillment. • Lawsuit may be filed early in this case. Exception to the rules: Refusal to pay money owed at a future date.

  17. Remedies for Breach • Acceptance of Breach • Accept the breach of contract and discharge the other party without asking for damages. • Rescission and Restitution • Canceling the contract and returning anything that has been received

  18. Remedies for Breach • Money Damages • Actual – Damages DIRECTLY related to breach. • Compensatory – Award only for injuries suffered nothing more. • Consequential – Damages that DO NOT flow directly from breach. • Incidental – Reasonable expenses that INDIRECTLY from breach of contract. • Liquidated – Anticipated damages agreed prior to contract being signed. • Nominal – Award to proved legal injury but no actual damages caused. • Punitive – Damages in excess of losses suffered in order to punish party for breach. • Speculative – Damages awarded not on fact but on expectations from contract fulfillment.

  19. Remedies for Breach • Specific Performance • Ask court to order the other party to do what they agreed to do. Only done when money damages are not sufficient to give relief. • Subject matter must be unique in nature. • Which of the following is unique? • Real Estate • Stocks of General Electric • ’65 Ford Mustang with 44,000 miles • A brand new Ford F-150 • Dozen Eggs

  20. Injunction • Court order that prevents a party from performing an act. • Temporary or permanent. • Any Violators of an injunction are in contempt of court.

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