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Quote of the Day
“If you can’t give me your word
of honor, will you give me
your promise?”
Samuel Goldwyn,
Hollywood producer
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Discharge
 A party is discharged when she has no
more duties under a contract.
 Most contracts are discharged by full
performance.
 Sometimes the parties discharge a
contract by agreement.
 Rescind means that they terminate it by
mutual agreement.
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Conditions
 A condition is an event that must occur
before a party becomes obligated under
a contract.
 How Conditions are Created
• Express Conditions -- No special language
is necessary to create the condition, but it
must be stated clearly somehow.
• Implied Conditions – The condition is not
stated, but is clear from the agreement.
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Types of Conditions
 Condition Precedent
• Must occur before a duty arises.
 Condition Subsequent
• Must occur after the particular duty arises.
 Concurrent Conditions
• Certain things must occur simultaneously.
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Performance
 Strict Performance
• Performance that is exactly what promised;
is usually not expected and failure to do so
does not cause for discharge.
 Substantial Performance
• A party that substantially performs its
obligations will receive the full contract
price, minus the value of any defects.
• A party that fails to perform substantially
receives nothing on the contract and will
only recover the value of the work, if any.
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Personal Satisfaction Contracts
 A personal satisfaction contract is one
which the promisee makes a personal,
subjective evaluation of the promisor’s
performance.
• A court uses a subjective standard only if
assessing the work involves feelings, taste,
or judgment and the contract explicitly
demands personal satisfaction.
• In all other cases, a court applies an
objective standard to the decision.
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Good Faith
 The Restatement (Second) of
Contracts §205 states: “Every contract
imposes upon each party a duty of
good faith and fair dealings in its
performance and its enforcement.”
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Time of the Essence
Clauses
 A time of the essence clause will
generally make contract dates strictly
enforceable.
 Merely including a date for performance
does not make time of the essence.
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Breach
 Material Breach
• Generally courts will discharge only if a
party committed a material breach.
 Anticipatory Breach
• Anticipatory breach is committed by one
party making it unmistakably clear that he
will not honor the contract.
 Statute of Limitations
• Will limit the time within which the injured
party may file suit.
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Impossibility
 True Impossibility
• Something has happened making it utterly
impossible to fulfill the promise.
 Commercial Impracticability
• Some event has occurred that neither party
anticipated, making the contract extraordinarily difficult and unfair to one party.
 Frustration of Purpose
• Some event has occurred that neither party
anticipated and the contract now has no
value for one party.
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“Good faith and reasonable
conduct will prevent many
contract disputes.”
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