Various Forms of Discharge by Agreement
Option to terminate- parties include a clause allowing termination in contract. Very common in
employment contracts- “either party may terminate this agreement by giving two months’ notice in
writing to the other party”
Condition precedent- term of contract that states contract will not move forward until some event has
occurred. The classical example is a “subject to financing” clause on a contract of purchase and sale. If
the buyer cannot get a sufficient mortgage loan at a stipulated rate, the deal will be discharged even
though it is a valid contract because of a failed condition precedent.
Condition subsequent- clause in contract that states that the contract will terminate on the occurrence
of an event. In the meantime, the contract goes ahead. An example would be a contract to work at a
ski hill over the winter and spring, and that your employment will continue until the snow disappears.
The “snow disappearing: is a condition subsequent that ends the contract.
Rescission- (important note: totally different concept from the rescission we learned about when
discussing misrepresentation in Chapter 9) Rescission is when the parties agree to bring their executory
contract to an end (executory = future consideration). You order a coffee at Tim Horton’s and agree to
pay the price stipulated. Before you pay and Tim Horton’s pours, you change your mind, and the Tim
Horton’s employee agrees. You effectively make a contract to end a contract (“How about we agree that
you keep your coffee and I’ll keep my money”?)
Accord and satisfaction- Here, you can’t use rescission because one party has fully performed the
contract, so one side has no “executory” consideration to give. Instead, the party that didn’t yet fully
perform their end of the bargain offers something else in place of performance of the existing contract.
Example: Malika and her neighbour agree that Malika will cut her neighbour’s grass the whole year, and
in exchange the neighbour will build Malika a new dining room table. Malika realizes she hates yard
work, and does not want to cut the grass anymore. Instead she offers to clean her neighbour’s housethe neighbour agrees.
Release- agreement under seal to terminate a contract. Because it’s under seal, we don’t have to worry
about who performed what part of their required consideration under the contract.
Variation-making small changes to an existing contract
Novation- one contract is entirely replaced with another- either one or the other party’s obligations
totally change or one of the parties change.
Waiver- essentially promissory estoppel. One party promises not to enforce their legal rights, and the
other party relies on it.