Lecture Dynamic business law - Chapter 20: Discharge and remedies

After reading this chapter, you should be able to answer the following questions: What are the primary methods of discharging a contract? What are the primary legal remedies available for a breach of contract? What are the primary equitable remedies available for a breach of contract?

Discharge and  Remedies

 Occurrence or non­occurrence of a condition

 Complete or substantial performance

 Material breach:  Occurs when party unjustifiably fails to 

substantially perform his obligations under contract

 Mutual Agreement

 Condition Precedent:  Particular event that must occur for a party’s duty to  arise

 Condition Subsequent:  Future event that terminates obligations of parties 

when it occurs

 Concurrent Conditions:  Each party’s performance conditioned on 

simultaneous performance of the other 

 Express Condition:  Condition explicitly state in contract (usually preceded 

by words such as “conditioned on,” “if,” “provided that,” or “when”)

 Implied Condition:  Condition not explicitly stated, but inferred from 

nature and language of contract

 Complete Performance:  Occurs when all aspects of parties’ 

duties under contract are carried out perfectly

 Substantial Performance:  Occurs when:

 Completion of “nearly all” terms of agreement;

 Honest effort to complete all terms; and

 No “willful departure” from terms of agreement

 Definition:  Party decides, before the actual time of performance, not to 

complete contract obligations

 Often occurs when market conditions change and one party realizes it will 

not be profitable to fulfill terms of contract

 Can occur either through express indication of intent, or action inconsistent  with intent to fulfill contract when performance due

 Once contract anticipatorily repudiated, non­breaching party discharged 

from obligations under contract, and can sue immediately for breach

his original contractual duty

original party’s place

 Alteration of Contract

 Bankruptcy

 Tolling of Statute of Limitations

 Impossibility of Performance

 Commercial Impracticability

Suit:

 Likelihood of success

 Desire/need to maintain ongoing relationship with potential 

defendant

 Possibility of getting better/faster resolution through 

alternative dispute resolution (ADR)

 Cost of litigation/ADR compared to value of likely remedy

had contract been fully performed

circumstances arising outside contract itself.  These damages must be within contemplation of  parties at time breach occurs

engaging in similar behavior in the future

“punish” defendant

actual damages resulted from defendant’s breach of contract, plaintiff wronged by defendant

fixed amount, or as formula for determining money due)

(Definition):

Obligation on non­breaching party 

(plaintiff) to use reasonable efforts to 

minimize damage resulting from 

defendant’s breach of contract

Contract

fulfill obligations under contract.  Usually awarded only when monetary damages  inadequate, and subject matter of contract unique (Example:  Contract for sale of  real estate) 

doing something (usually a prohibition against certain actions)

Recovery

 Plaintiff conferred benefit on defendant

 Plaintiff reasonably expected to be compensated for benefit 

conferred on defendant

 Defendant would be “unjustly enriched” from receiving 

benefit without compensating plaintiff