Week 5 Ch11 pp 263-268,272-272,276-284; Ch12 pp.

293-297,293-303,304-310 Intro to Bus Law

Page 267
Discharge by Performance
Discharge: a contract is discharged when a party is relieved of the need to fulfill any more promised
Performance: occurs when the parties fulfill all the obligations contained in the contract
Time is not of the essence: means that a party is entitled to preform late even if the contract sets a
specific date
Legal tender: is a payment of notes (bills) and coins to a certain value

Pages 272-273
Damages: are the amount of money that the court may order the defendant to pay to the plaintiff
Substantial performance: generally satisfies a contract but is defective or incomplete in some minor
way
Entire contract: says that no part of the price is payable unless all the work is done

Pages 276-284
Rescission
Executory: a contract is executory if a party has not fully preformed its obligation
Executed: a contract is executed if a party has fully performed its obligation
Rescission: occurs when the parties agree to bring their executory contract to an end
Accord and Satisfaction: occurs when a party gives up the right to demand contractual performance in
exchange for some new benefits
Novation: is a process in which one contract is replaced with another
Release: occurs when a party abandons a right to insist on contractual performance
Waiver: occurs when a party abandons a right to insist on contractual performance
Gratuitous Promise: waiver leads to the enforcement of a gratuitous promise. It runs contrary to the
general rule that the law will not compel a person to give something for nothing
Detrimental Reliance: is a legal concept under the law of contracts. Ordinarily, a valid contract requires a
proper exchange of consideration between the parties. A mere promise to do something in the future is
usually not enforceable unless the beneficiary of the promise also promises to do something in return.
Retraction: Even if a party has waived its rights, it may be entitled to retract its promise if the other
party would not be prejudice
Consideration Usual Effect on Contract
Option to terminate Part of original contract Contract terminated
Condition subsequent and Part of original contract Contract terminated
conditional precedent
Rescission Each party gives up rights under Contract terminated
contract
Accord and satisfaction One party gives up old right— Contract varied
other party provides new
consideration
Novation Each party gives up rights under Contract varied or replaced
old contract
Release Seal Contract terminated
Waiver None Contract varied
Week 5 Ch11 pp 263-268,272-272,276-284; Ch12 pp.293-297,293-303,304-310 Intro to Bus Law

Termination by Operation Law-Lapse of Limitation Period

Statutes of limitation: require a party who has suffered a breach of contract to sue within a certain time
period
Acknowledgement: occurs when a debtor admits that a debt exists

Discharge for Breach of Condition

Breach: occurs whenever a party does not preform precisely as promised

Types of Terms
Condition: a term is a condition if a breach would substantially deprive the innocent party of the
expected benefit of the contract
Warranty: a term is a warranty if a breach would not substantially deprive the innocent party of the
expected benefits of the contract
Intermediate/innominate: a term is intermediate or innominate if, depending upon the circumstances, a
breach may or may not substantially deprive the innocent party of the expected benefit of the contract
Type of term Effect of breach on innocent Right of innocent party
party
Condition Substantially deprived of Discharge contract and claim
benefit of contract damages or continue with
contract and claim damages
Warranty Not substantially deprived of Continue with contract and
benefit of contract claim damages
Intermediate Depends upon circumstances- Depends upon circumstances—
may or may not be substantially discharge contract and claim
deprived of benefit of contract damages or continue with
contract and claim damages

Pages 294-310
Rescission: is the cancellation of a contract with the aim of restoring the parties to their original
positions
Damages: is an award of money that is intended to cure a wrongful event, such as a breach of contract
Expectation Damages: represent the monetary value of the benefit that the plaintiff expected to receive
under the contract

Expectation damages=expected benefits under the contract−cost unde the contract

Intangible loss: is a loss that does not have any apparent economic value
Remote: a loss is remote if it would be unfair to hold the defendant legally responsible for it

Mitigation of Damages
Mitigation: occurs when the plaintiff takes steps to minimize the losses flowing from the defendant’s
breach
Reliance Damages: represent the monetary value of the expenses and opportunities that the plaintiff
wasted under a contract
Nominal Damages: symbolizes the fact that the plaintiff suffered a wrong when the defendant broke a
promise
Week 5 Ch11 pp 263-268,272-272,276-284; Ch12 pp.293-297,293-303,304-310 Intro to Bus Law

Liquidated Damages: represent a genuine attempt to estimate the value of the loss that may occur as a
result of a breach
Penalty: requires a party to pay an exorbitant amount if they breach the contract
Punitive Damages: are intended to punish the defendant and discourage other people from behaving
badly
Specific Performance: occurs when that court orders the defendant to fulfill a contractual obligation to
do something
Mutuality: means that specific performance can be awarded to the plaintiff only if a court would award
such relief against the plaintiff
Injunction: occurs when the court orders the defendant to not do something that is prohibited by the
contract