Chapter 12 Third Parties and Discharge of Contracts
1.
An assignment is the transfer of a right; a delegation is the transfer of a
duty.
2.
Contractual obligations come to an end by: (a) performance, (b)
agreement, (c) impossibility, (d) operation of law, and (e) breach of contract.
3.
If the time for performance is not mentioned in a contract, it must be
performed within a reasonable time.
4.
To be in a position to bring suit against another for breach of contract, it is
necessary to make tender.
5.
An agreement to perform in a different manner than originally called for is
an accord. The completion of that agreed-on performance is a satisfaction.
6.
Legal reasons for discharging a contract of impossibility are: (a) death of a
person who was to perform personal services, (b) destruction of the exact subject matter
of the contract, and (c) subsequent illegality of that particular performance.
7.
Statutes of limitations are tolled while a plaintiff is under a disability such
as infancy or mental illness and while a defendant is out of state.
8.
Nominal damages are damages in name only, punitive damages are used
as a measure of punishment for the defendant's wrongful acts, liquidated damages are
damages that are agreed on by the parties at the time of the execution of the contract, and
consequential damages are losses that do not flow directly from the breach but from the
consequences of it.
9.
Specific performance is used only when the subject matter of the contract
is either unique or rare so that money damages are not an adequate remedy for the injured
party.
Understanding Legal Concepts
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Checking Terminology
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Using Legal Language
Needing a car for a trip she was planning, Holly entered into a contract to buy a late
model Toyota from Enrique for $7,000. Time was of the essence of the contract because
Holly planned to leave on the trip the next day. Before carrying out the contract,
however, Holly's trip was canceled. She decided to transfer her right to the car to her
friend Maxine. The transfer of a right is called a(n) assignment rather than a(n)
delegation, which is a transfer of a duty. Holly was the assignor, and Maxine was the
assignee. Enrique agreed to deal solely with Maxine and to release Holly from all
obligations under the contract, thus creating a(n) novation. Enrique and Maxine were in
privity of contract, which is the legal name for the relationship that existed between
them. When the time for performance—that is, the carrying out of the contract—arrived,
Enrique made tender of performance by offering to turn the car over to Maxine. She
offered to pay him with Mexican pesos, which is not legal tender in the United States.
Enrique refused the tender of payment, but then reached an agreement with Maxine to
change the price for the car to $6,000 and to postpone the time for performance for a
week. This agreement to change the performance is called a(n) accord. When the agreed
performance is completed, it will be known as a(n) satisfaction. The next day, Maxine
told Enrique that she had changed her mind and was not going to buy the car. Because
this occurred before the time for performance had arrived, it is known as a(n)
anticipatory breach. Enrique would not be able to ask the court to order specific
performance because the subject matter of the contract was not unique. Similarly,
because the parties had not agreed on damages at the time of the execution of the
contract, no liquidated damages existed. If Enrique suffered no actual monetary loss
because of the breach of contract by Maxine, he would only be able to recover nominal
damages from her in court plus incidental damages to take care of any reasonable
expenses resulting from the breach. Enrique owed a duty to Maxine to mitigate the
damages—that is, keep them as low as possible. This case was not one involving
punitive damages, or exemplary damages, such as double or triple the amount of actual
damages. The statute of limitations—that is, the time limit for bringing suit—had not
run out.
Puzzling Over What You Learned
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Caveat: Allow squares for spaces between words and punctuation (apostrophes, hyphens, etc.) when filling in
crossword.
Across
2. The failure of a party to a contract to carry out its terms.
9. One who transfers a right by assignment.
12. Compensation in money for loss or injury.
13. The transfer of a right from one person to another.
14. One to whom a right is transferred by assignment.
Down
1. The relationship that exists between two or more contracting parties.
3. Announcement before time for performance of a breach of contract.
4. Damages in name only.
5. Discharging a contract by doing that which one agreed to do.
6. Damages agreed to at the time of the execution of a contract.
7. A time that may be fairly allowed depending on the circumstances.
8. Lessen; keep as low as possible.
10. An agreement whereby an original party to a contract is replaced.
11. The transfer of a duty by one person to another.