16
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Click your mouse
anywhere on the
screen when you are
ready to advance the
text within each slide.
After the starburst appears behind the blue
triangles, the slide is completely shown.
You may click one of the blue triangles to
move to the next slide or the previous slide.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
16
“If you can’t give me your word
of honor, will you give me
your promise?”
Samuel Goldwyn,
Hollywood producer
16
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 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.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
16
 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.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
16
 Condition Precedent
• Must occur before a duty arises.
 Condition Subsequent
• Must occur after the particular duty arises.
 Concurrent Conditions
• Certain things must occur simultaneously.
16
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 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.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
16
 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.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
16
 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.”
16
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 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.
16
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 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.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
16
 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.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
16
16
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.