BUSINESS LAW
Alternate Edition 11thEd.
Jentz  Miller  Cross
Chapter 17
Contracts: Performance
and Discharge
Copyright © 2009 South-Western Legal Studies in Business,
a part of South-Western Cengage Learning.
Introduction
 How does a party know when his or her
obligations under the contract are at an
end?
 A party may be discharged from a valid
contract by:
– A condition occurring or not occurring.
– Full performance or material breach by the
other party.
– Agreement of the parties.
– Operation of law.
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a part of South-Western Cengage Learning.
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§1: Conditions
 Possible future event, the occurrence
or nonoccurrence of which will trigger
the performance of a legal obligation
or terminate an existing obligation
under a contract.
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Conditions
 Types of Conditions:
– Conditions Precedent.
– Conditions Subsequent.
– Conditions Concurrent.
• Express.
• Implied in Fact.
• Implied in Law.
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§2: Discharge by Performance
 The contract comes to an end when both parties
fulfill their respective duties by performing the
acts they have promised.
 Types of Performance:
– Complete Performance.
– Substantial Performance (minor breach).
• CASE 17.1 Jacobs & Young v. Kent
(1921).
– Performance to the Satisfaction of one of the
parties or a third party.
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Material Breach of Contract
 Breach of Contract - the
nonperformance of a contractual
duty.
 Material breach occurs when there
has been a failure of consideration.
Discharges the nonbreaching party
from the contract.
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Material Breach of Contract
 In a non-material breach, the duty to
perform is not excused and the nonbreaching party must resume
performance of the contractual
obligations undertaken.
 CASE 17.2 Shah v. Cover-It, Inc.
(2004).
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Anticipatory Repudiation
 If before performance is due, one party
refuses to perform his or her contractual
obligation.
 Results in material breach.
 The nonbreaching party should not be
required to remain ready and willing to
perform when the other party has
repudiated the contract.
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Anticipatory Repudiation
 The nonbreaching party should have the
opportunity to seek a similar contract
elsewhere.
 Time For Performance.
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a part of South-Western Cengage Learning.
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§3: Discharge by Agreement
 Discharge by Rescission.
 Discharge by Novation.
– Previous Obligation.
– All parties agree to new contract.
– Extinguishment of old obligations.
– New Contract Formed.
 Discharge by Substituted Agreement.
 Accord and Satisfaction.
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§4: Discharge by Operation of Law
 Alteration of The Contract.
 Statutes of Limitations.
 Bankruptcy.
 Impossibility or Impracticability. 
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Impossibility or Impracticability
of Performance
 Objective Impossibility of Performance.
– Death or incapacitation prior to performance;
– Destruction of the Subject Matter; or
– Illegality in performance.
 Commercial Impracticability.
– Key: Circumstances not foreseeable.
– CASE 17.3 Facto v. Pantagis (2007).
 Frustration of Purpose.
 Temporary Impossibility.
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a part of South-Western Cengage Learning.
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