MODULE 23 CONTRACTS 141

3. Satisfaction as a condition-normally when a contract guarantees satisfaction, this means agree-

ment is performed when a reasonable person would be satisfied. However, if agreement is ex-
pressly conditioned upon personal satisfaction of one of contracting parties, then performance
does not occur until that party is actually satisfied.
2. Tender of performance is an offer to perform (e.g., offer to pay debt)
EXAMPLE: X has contracted to buy goods from Y with delivery and payment to take place concurrently. X must offer
the money to Y before Y has breached the contract for failure to deliver.
4. Under the doctrine of substantial performance (very important), performance is satisfied if
5. There has been substantial performance (i.e., deviations are minor), and
6. There has been good-faith effort to comply with contract
7. Then damages for deviations are deducted from price if above are met
8. This is often used in relation to construction contracts
9. Payment of less than agreed-upon sum does not fulfill obligation unless both parties
compromise
based on a bona fide dispute as to amount owed
10. Executory contract-has not yet been performed; only promises have been given
6.· Standards of interpretation of contracts
11. For ordinary words, courts use normal meaning in dictionary
12. For technical words, courts use technical meaning supplied by expert testimony if necessary
13. Any ambiguity in contract is construed against party who drafted contract
14. Typed words prevail over preprinted words-handwritten words prevail over both preprinted and
typed words
15. When both parties are members of same profession or trade, words are given meaning in that pro-

fession or trade unless contract states otherwise

16. Discharge of Contracts
17. By agreement-new consideration is necessary, but often it is supplied by a promise for a
promise
(e.g., both parties agreeing to release other party of contractual obligation)
18. Both parties may mutually agree to rescind contract-e-named mutual rescission
(1) Both parties of ~ contract may agree to satisfy contract by doing something different called ac-
cord and satisfaction
19. Under UCC, no consideration is needed to modify a contract (for sale of goods) if in good faith
20. A novation is an agreement by three parties whereby a previous agreement is discharged by crea-
tion of a new agreement
(1) May involve substitution of creditors, debtors, or of obligations
EXAMPLE: X has agreed to do some accounting workfor Y for $2,000. Since X is very busy, X, Y, and Z all
agree to let X out of the contract and insert Z in his place. This is a novation. X and Y no longer have any
obligations to each other.
EXAMPLE: A party purchases land and assumes a mortgage. '{he original mortgagor is still liable unless a
novation has occurred.
21. By performance becoming objectively impossible
a. But mere fact of performance becoming more costly does not excuse performance
EXAMPLE: A agreed to sell a specified quantity of corn to B at specified prices. He had planned to sell his own
corn until his crop was destroyed. Even though he may make less profit or even suffer a loss, he can still fulfill the
contract by purchasing the corn from others to resell to B under his contract.
22. By breach of contract
23. Anticipatory breach (repudiation) is renunciation before performance is due
24. May sue at once, or
25. Cancel contract, or
26. Wait until time performance is due or for a reasonable time and then sue, but nonrepudiating party
has duty to mitigate damages
27. If other party has not changed position in reliance upon the repudiation, repudiating party can re-
tract repudiation and perform at appointed time, thereby discharging his/hercontractual obligation