Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Legal Terminology Fifth Edition by Gordon W. Brown PowerPoints prepared by Kimberly Lundy

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Chapter 18 Third Parties and Discharge of Contracts

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Third Parties oThird party beneficiary – someone for whose benefit a promise is made but not a party to the contract. nThird party is not in privity of contract (the relationship between contracting parties).

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Rights and Duties oParties to a contract receive rights and incur duties. nAssignment – the transfer of a right. Person who transfers right is the assignor. nDelegation – transfer of a duty. (Personal services cannot be transferred without consent). nNovation – where contracting parties agree to new party taking the place of an old one.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Discharge of Contracts oPrincipal ways of discharging contracts (ending contractual obligations): nPerformance nAgreement nImpossibility nBreach of Contract

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Performance oPerformance – parties do what they agreed to do. Most common form of discharge. nSubstantial performance doctrine allows party to sue despite slight deviation in performance.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Time for Performance oIf time is of the essence (time is critical), breach occurs at end of stated time. oIf no time is specified, reasonable time is required.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Tender oTo sue for breach, party must make tender. nTender of performance (offer to do what was agreed). nTender of payment (offer to pay money owed) in legal tender (legal form of money).

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Agreement oAgreement – occurs where parties agree to end contract. nAccord – occurs if parties agree to different manner of performance. nAccord and satisfaction – when performance is completed.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Impossibility oImpossibility – allows contracts that cannot be performed to be discharged by death of party, destruction of subject matter or subsequent illegality.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Operation of Law oOperation of law – discharges contracts due to: nBankruptcy (debtors obligations discharged by court), or nStatutes of limitations (time limit to bring action expired).  Tolled (stops running) by certain acts (if plaintiff is under a disability- infancy or mental illness).

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Breach of Contract oBreach of Contract – one of the parties fails to perform. nAnticipatory breach – if party announces they will not perform before time for performance.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Breach of Contract oDamages – money lost due to breach. nNominal (in name only) nCompensatory (actual losses) nPunitive or Exemplary (punish defendant’s wrongful acts) nLiquidated (agreed upon in contract) nIncidental (reasonable expenses that indirectly result from breach) nConsequential (losses that flow from consequences of breach).

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Breach of Contract oMitigation – injured party has duty to mitigate damages (keep them as low as possible).

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Breach of Contract (Cont’d) oSpecific Performance – orders breaching party to do what they agreed to do. nUsed only when subject of contract is unique or rare and money damages are inadequate.