Chapter 11 PowerPoint Notes & Assignment– How Contracts Come to an End.
SECTION 11.1 – PERFORMANCE AND AGREEMENT. Understanding when ...
BUSINESS LAW Chapter 11 PowerPoint Notes & Assignment– How Contracts Come to an End SECTION 11.1 – PERFORMANCE AND AGREEMENT Understanding when contracts come to an _________________ will help you determine your legal _____________________ and obligations in such situations. Ending a Contract When contracts eventually end, they are said to be **__________________________________________. Contracts can be discharged by ___________________________ and by ___________________________. Discharge by Performance Most contracts are discharged by ** ________________________________________, meaning the parties fulfill the terms of the contract by doing what they promised earlier. As long as all terms have been carried out _________________________ and ______________________, the contract is discharged by ** ____________________________ ______________________________. Time for Performance The time for completing a contract may be important to _______ or both of the parties. If the time is not stated in the contract and there is a question of performance, the courts will say the contract must be completed in a **_______________________________________ _________________. Reasonable time: will vary with the ______________________ is defined as the time that is suitable, ___________________, and proper to the objective in view A contract will specify that time is of the essence when it is a vital or essential element of the contract. Satisfactory Performance When people perform _____________________ for others, the law requires that those services be done in a satisfactory manner. Regardless of whether or not a contract specifically states the work be performed “in a satisfactory manner,” if one party believes the job is unsatisfactory, the court uses the reasonable ____________________ test. The court asks, “Would a ________________________ person consider the job to be completed in a satisfactory manner?” The dispute will then be settled based on the answer to this question as determined by a ______________ or ____________________________________.
If one party agrees to perform services for another “to the other’s satisfaction,” the other party must be satisfied to be _________________________________ to the contract. Substantial Performance An exception to the rule of discharging a contract by complete performance is substantial performance. **______________________________ __________________________ is slightly less than full performance. Someone who has fulfilled the _______________ requirements of a contract in good faith, leaving only minor details ______________________________, has substantially performed. The courts will allow the person to recover the amount agreed upon under the contract, __________ the cost of completing the job. Substantial performance is often applied to _____________________________ contracts. Tender of Performance A **_____________________________ is an offer to do what you have agreed to do under a contract. For example: if buying a car—offering to ____________________ money to the seller at the agreed time if selling a car—offering to ____________________ the car to the buyer at the agreed time If _______________ party has made tender, then neither party is in a position to bring suit against the other. The person offering to pay the required amount of money must offer **_____________________ ______________________—U.S. coins or currency. Offering a ________________________, even if it is certified, is ________ a valid tender of payment. Discharge by Agreement Contracts are created by _________________ agreement and may be terminated by mutual agreement. Mutual Release A **___________________________ ________________________ is an agreement between two parties to end an agreement. By mutual agreement, the contract no longer ________________________. Accord and Satisfaction A contract can also be discharged when one party to an agreement agrees to accept performance from the other party that is __________________________ from what was agreed upon in the original contract. In effect, one contract is substituted for another, which is known as **_______________________________ _____________ ____________________________. It is often used to settle an ______________________ disagreement or unforeseen circumstances regarding an amount _______________________.
SECTION 11.2 – IMPOSSIBILITY OF PERFORMANCE AND OPERATION OF LAW Involuntary Discharge Understanding when contracts are discharged by _________________________ and by operation of ______________ will help you know your legal rights and obligations in such situations. Some contracts come to an end despite what the parties _______________________ or what they actually do. In these situations, the obligations that exist under the contract may also ____________________. Two ways contracts are discharged: 1. by __________________________________ of performance 2. by __________________________________ of law Discharge by Impossibility of Performance A contract that becomes legally ______________________________ to perform generally may be discharged and both parties _________________________ from the obligation. Three situations in which the courts will allow a discharge for ** ______________________________ _________ _________________________________ are: 1. __________________ or illness that prevents the performance of a personal service contract 2. __________________ of the exact subject matter or the means for performance 3. __________________, or situations in which the performance of a contract becomes illegal Death or Illness in a Personal Service Contract The death or illness of a party to a contract may be an excuse for nonperformance only if the contract requires the ______________________ service of the person who has died or become ill. Destruction of the Exact Subject Matter If the subject matter that is essential to the performance of the contract is destroyed through no __________________ of either party, the contract is discharged. The destruction must occur ______________ the contract is entered into, but ______________ it is carried out. Illegality A contract is considered void if its performance would be _______________ at the time the agreement was initiated. The same general rule applies when performance ________________ illegal ___________ the contract has been initiated.
Discharge by Operation of Law At times, the best interests of society demand that a contract be terminated. Under these circumstances, the law declares contract discharged by **___________________________ ___________ ______________. These include: when a wrongful __________________________ has occurred when the ___________________ of limitations has run its course in cases of _________________________________ Wrongful Alteration Sometimes wrongful acts of one of the parties, such as altering, or ___________________, a contract, will discharge a contract by operation of law. Statute of Limitations All states have a law that specifies in what ___________________ a legal action may be brought on a contract, which is called the **_________________________ ________ __________________________. Bankruptcy Congress has the authority to pass **________________________ ________________, which are set procedures for discharging a debtor’s obligations. Certain debts cannot be discharged under bankruptcy laws. _______________________, during the first five years of the repayment period taxes _________________________ child support maintenance _______________________________
BUSINESS LAW Chapter 11 – You’re the Judge & Assessment Questions DIRECTIONS: For each of the following cases, write Yes or No to indicate your decision. Then, in your own words, state the legal principle or legal reason that applies in the case. 1. Ed Piro agreed to work for two years for Sid Milne. At the end of the two months, Piro went to Milne and asked to be released from his contract. Milne agreed to do this. Was the contract discharged?
2. Sue Larson made a contract with Joan Ross to refinish a vanity dresser for $50. Larson agreed to put on five coats of clear lacquer, but due to an error, the dresser was returned after only four coats had been applied. Ross refused to pay the contract price of any portion of it. Can Larson collect any payment for her service?
3. Debbie Lang contracted to install a septic tank in Sam Rice’s back yard. Before beginning the excavating work, Lange discovered that a recent health department ordinance prohibited the installation of septic tanks in that neighborhood. Is the contract discharged?
4. Tom Jensen agreed to pave Sarah Dougherty’s driveway for $2,500 and to begin on or before March 17. Jansen began the work on March 18. Did he breach the contract?
Assessment Questions Section 11.1 Questions 1 - 4, page 230 Section 11.2 Questions 1 - 4, page 235
