4.02

• Complete
– All terms have been carried out properly and completely.
• Time
– Court will honor time request, if it is deemed
“of the essence.”
– If not mentioned in contract, then a reasonable time will be assumed.

• Satisfactory
– Law requires that services be completed in a satisfactory manner.
– Reasonable person test
• Would a reasonable consider the work to done in satisfactory manner?
• Substantial
– Slightly less than full performance
• Must meet the following rules:
– Acted in Good Faith
– Completed Major Components of Contract
– Only Minor Details Incomplete.

• Tender of Performance
– Tender – Offer to Perform
– Must make tender even if you know the other party will not perform their part of the contact.

• Mutual Release
– Each side releases the other side from the contract.
• Accord and Satisfaction
– Substitute one contract for another.

• Death or Illness in a Personal Service
Contract
– Only allowed in Personal service contracts.
– What is personal service?
• Photographer
• Artist
– Any other contract must be completed.

• Destruction of the Exact Subject Matter
– If the subject matter is essential to the contract then it will be discharged.
• Illegality
– Any illegal contract is void.

• Wrongful Alteration
– Any altering or changing of a contract will discharge parties to the agreement.
• Statute of Limitations
– Individual states have a time limit on lawsuits to be filed.
– What is the only crime/tort that doesn’t have a time limit?
Murder

• Bankruptcy
– Debtors can be discharged from contracts after filing for bankruptcy.

• Legally transferring your RIGHTS in a contract.
– Assignor – party who transfers the right.
– Assignee – party to whom the right is transferred.
• No consideration needed.
• Must not change the obligations in the contract.
• Must be a RIGHT not a DUTY.
• Assignor is responsible for contract fulfillment.

• Transfer a duty.
• Delegating party is still responsible for the contract being fulfilled.
• Contracts that CANNOT be delegated:
– Promise to perform service personally.
– Exercise of personal skill or judgment.
– Contract prohibiting delegation.

• Replacing a party to a contract with a new one.
• The other terms to the contract remain the same.

• Privity of Contract
– Determines who can sue who over a breach of contract.
• Third-Party Beneficiary
– A person who is not a party to a contract but benefits from it.
– Has the right to sue over breach of contract.

• Wrongful failure to perform one or more promises in a contract.
• Anticipatory Breach
– Notified that a party to the contract will not fulfill their part of the contract prior to the required time of fulfillment.
– Lawsuit may be filed early in this case.
Exception to the rules: Refusal to pay money owed at a future date.

• Acceptance of Breach
– Accept the breach of contract and discharge the other party without asking for damages.
• Why?
– Must show damages in order to win monetary damages.
– Not worth the party’s time to file lawsuit.

• Money Damages
– Actual – Damages DIRECTLY related to breach.
– Compensatory – Award only for injuries suffered nothing more.
– Consequential – Damages that DO NOT flow directly from breach.
– Incidental – Reasonable expenses that INDIRECTLY from breach of contract.
– Liquidated – Anticipated damages agreed prior to contract being signed.
– Nominal – Award to proved legal injury but no actual damages caused.
– Punitive – Damages in excess of losses suffered in order to punish party for breach.
– Speculative – Damages awarded not on fact but on expectations from contract fulfillment.

• Specific Damages
– Ask court to order the other party to do what they agreed to do.
– Subject matter must be unique in nature.
– Which of the following is unique?
• Real Estate
• Stocks of General Electric
• ’65 Ford Mustang with 44,000 miles
• A brand new Ford F-150
• Dozen Eggs
Answers: Real Estate and Mustang are unique.

• Court order that prevents a party from performing an act.
• Temporary or Permanent.
• Violators are in contempt of court.

• Injured party must try to reduce the damages by all means possible (mitigation of damages).
• What could you do to mitigate damages if a tenant breaks the lease and moves out early?
Possible answers:
Advertise for rent sign in yard, put sign up at local university, and place an advertisement in the local newspaper.