9-1 Chapter 9— Contractual Issues – Form, Interpretation, Performance, and Discharge REED SHEDD PAGNATTARO MOREHEAD F I F T E E N T H E D I T I O N McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

9-2 Learning Objectives  To appreciate that valid, enforceable contacts can take many forms.  To understand concepts of how contract performance analysis occurs.  To appreciate that contractual agreements are discharged through performance.  To learn that nonperformance of contracts results in a breach unless performance is excused.

9-3 think TANK think TANKthink All contracts, to be valid and enforceable must be in writing and signed by the parties to the agreement? a. True b. False

9-4 Form and Interpretation of Contracts Written v. Oral Contracts Written v. Oral Contracts Statute of Frauds Rules of Interpretation Rules of Interpretation

9-5 Oral Contracts Generally as enforceable as written agreements Informal Everyday examples:  Buying fast food  Vending machines

9-6 Statute Of Frauds Certain Contracts Must Be In Writing LandDebts of Others 1 YearGoods = $500+

9-7 Exceptions to SOF Part Performance Rules involving goods UCC Specifically manufactured goods Judicial admission

9-8 Parol Evidence Rule Parties to a complete and final written contract cannot introduce oral evidence in court that changes the intended meaning of the written terms.

9-9 Contract Interpretation Rules help solve disagreements Usual meaning for common words Interpreted against party drafting Specialized meaning for specialized trade Handwritten against party drafting

9-10 Duty to Perform Offeror Offeree Contract Duty To Perform OfferAcceptance AGREEMENT Capacity and Legality Supported by Consider- ation

9-11 pop QUIZ pop QUIZpop What is the first and most important place to look to determine what parties to a contract agreed to? a. their current statements or testimony as to what was agreed to. b.notes from negotiation sessions. c. the words of the contract. d.none of the above.

9-12 Conditions of Performance Precedent Subsequent Concurrent Express Implied

9-13 Order of Performance  Look to contract  If not addressed, payment before delivery  Delivery – UCC gap-fillers  Tender – offer to perform

9-14 Levels Of Performance Fulfilledallduties Fallenshortafterhonestattempt Lessthanrespon-siblyaccept-able COMPLETE SUBSTANTIAL MATERIAL BREACH

9-15 Divisibility of Performance  Contract segments e.g. employment pay periods  Construction contracts generally not divisible

9-16 Contract Discharge Discharged - Party released from obligation Complete performance Tendered performance, but rejected Impossibility Commercial impracticability Waiver/release Substantial performance Performance part of divisible contract

9-17 think TANK think TANKthink A duty of performance under a contract is discharged because of commercial impracticability and impossibility of performance. A.Yes B. No