Contracts - Performance and Discharge

Chapter 16
Contracts — Performance
and Discharge
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.
2
§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.
Types of Conditions:
Conditions Precedent.
Conditions Subsequent.
Conditions Concurrent.
• Express.
• Implied in Fact.
• Implied in Law.
3
§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).
Performance to the Satisfaction of One of the
Parties or a Third Party.
Case 17.1: Jacobs & Young v. Kent (1921).
4
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 non
breaching party from the contract.
In a Minor breach, the duty to performed is not
excused and the non-breaching party must
resume performance of the contractual
obligations undertaken.
5
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.
The nonbreaching party should have the
opportunity to seek a similar contract
elsewhere.
6
§3: Discharge by Agreement
Rescission.
Novation.
Substituted Agreement.
Accord and Satisfaction.
7
§4: Discharge by
Operation of Law
Alteration of a contract.
Statutes of Limitations.
Bankruptcy.
Impossibility or Impracticability of
Performance.
8
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.
Frustration of Purpose.
Temporary Impossibility.
9
Case 16.1: Jacobs & Young v. Kent
(Substantial Performance)
FACTS:
Jacobs & Young built a house for Kent. A
subcontractor’s oversight led to a failure to install pipe
of “Reading manufacture,” as the contract required.
Kent ordered Jacobs to replace it. Jacobs refused on
grounds that it would mean demolishing the house.
Kent did not make the final payment, and Jacobs sued.
The court refused to accept evidence that the installed
pipe was of the same quality, appearance, market value,
and cost as Reading pipe, and entered a verdict for
Kent. Jacobs appealed.
10
Case 16.1: Jacobs & Young v. Kent
(Substantial Performance)
HELD: REVERSED. FOR JACOBS.

“The courts never say that one who makes a
contract fills the measure of his duty by less
than full performance.”
Court said that the amount of damages is the
difference in value between the completed
house and a house with the correct pipe—not
the cost of replacing the pipe (demolishing the
house).
11
Case 16.2: Van Steenhouse v.
Jacor Broadcasting
(Material Breach of Contract)
FACTS:
In 1991, Van Steenhouse signed a three-year agreement
as a radio talk show host for Jacor, including salary and
bonuses.
Less than 3 years later, Jacor replaced her show with
Rush Limbaugh’s program.
Jacor paid Van Steenhouse her base salary, but did not
employ her as a talk show host and did not pay a bonus.
Van Steenhouse sued Jacor for breach of contract. The
court ruled that Jacor materially breached the contract.
Jacor appealed.
12
Case 16.2: Van Steenhouse v.
Jacor Broadcasting
(Material Breach of Contract)
HELD: AFFIRMED. FOR VAN
STEENHOUSE.
Jacor’s performance fell far short of substantial
performance.
“An obligation to furnish work arises if the employee
materially benefits from performing the duties
described in the agreement.”
In this case, “Van Steenhouse lost the opportunity to
build and maintain her professional marketability. In
addition, Van Steenhouse lost the opportunity to earn a
* * * performance bonus.”
13
Case 16.3: Syrovy v. Alpine Resources
(Commercial Impracticability)
FACTS:
Syrovy agreed to sell Alpine Resources all of the
timber on Syrovy’s property that Alpine could harvest
over a two-year period for $140,000. Alpine harvested
some timber and paid Syrovy $50,000.
Syrovy sued for the balance. Alpine defended on the
ground of commercial impracticability, claiming bad
weather conditions and the hunting season.
The court granted Syrovy’s motion for summary
judgment. Alpine appealed.
14
Case 16.3: Syrovy v. Alpine Resources
(Commercial Impracticability)
HELD: AFFIRMED. FOR SYROVY.

Nonperformance may be excused if an
unforeseen contingency occurs, the
nonoccurrence of which was a basic assumption
made by the parties to the contract.
Alpine’s contract negotiator was “a logger with
considerable experience in purchasing timber”
who should have foreseen that weather
conditions and hunting season problems would
have made performance difficult.
15

Contracts - Performance and Discharge

Uploaded by

Copyright:

Available Formats

Contracts - Performance and Discharge

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Contracts - Performance and Discharge

Uploaded by

Copyright:

Available Formats

Chapter 16

HELD: REVERSED. FOR JACOBS.

HELD: AFFIRMED. FOR SYROVY.

You might also like