1. Impossibility of Performance and Operation of Law Section 11.2

2. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End What You’ll Learn How to explain situations in which the law will permit a discharge by impossibility (p. 231) How to identify discharges that occur by operation of law (p. 233)

3. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End What You’ll Learn How to define the statute of limitations (p. 233) How to identify debts that cannot be discharged in bankruptcy (p. 235)

4. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Why It’s Important Understanding when contracts are discharged by impossibility and by operation of law will help you know your legal rights and obligations in such situations.

5. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Legal Terms impossibility of performance (p. 231) operation of law (p. 233) statute of limitations (p. 233) bankruptcy laws (p. 235)

6. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Involuntary Discharge Discharge by Impossibility of Performance Death or Illness in a Personal Service Contract Destruction of the Exact Subject Matter Illegality Section Outline

7. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Section Outline Discharge by Operation of Law Wrongful Alteration Statute of Limitations Bankruptcy

8. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Pre-Learning Question How can a contract be involuntarily discharged?

9. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Some contracts come to an end despite what the parties intend or what they actually do. In these situations, the obligations that exist under the contract may also expire. Involuntary Discharge

10. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Two ways contracts are discharged: Involuntary Discharge 1.By impossibility of performance 2.By operation of law

11. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Pre-Learning Question How can contracts be discharged by impossibility of performance?

12. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End A contract that becomes legally impossible to perform generally may be discharged and both parties released from the obligation. Discharge by Impossibility of Performance

13. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Three situations in which the courts will allow a discharge for impossibility of performance are: Discharge by Impossibility of Performance 1.Death or illness that prevents the performance of a personal service contract

14. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Discharge by Impossibility of Performance 2.Destruction of the exact subject matter or the means for performance 3.Illegality, or situations in which the performance of a contract becomes illegal

15. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End The death or illness of a party to a contract may be an excuse for nonperformance only if the contract requires the personal service of the person who has died or become ill. Death or Illness in a Personal Service Contract

16. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End If the subject matter that is essential to the performance of the contract is destroyed through no fault of either party, then the contract is discharged. Destruction of the Exact Subject Matter

17. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End The destruction must occur after the contract is entered into, but before it is carried out. Destruction of the Exact Subject Matter

18. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Illegality A contract is considered void if its performance would be illegal at the time the agreement was initiated. The same general rule applies when performance becomes illegal after the contract has been initiated.

19. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Pre-Learning Question How can contracts be discharged by operation of law?

20. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End At times, the best interests of society demand that a contract be terminated. Under these circumstances, the law declares contract discharged by operation of law. Discharge by Operation of Law

21. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End These situations include: Discharge by Operation of Law When a wrongful alteration has occurred When the statue of limitations has run its course In cases of bankruptcy

22. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Sometimes wrongful acts committed by one of the parties, such as altering, or changing, a contract, will discharge a contract by operation of law. Wrongful Alteration

23. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End All states have a law that specifies the time period in which legal action may be brought on a contract. This law is called the statute of limitations. Statute of Limitations

24. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Congress has the authority to pass bankruptcy laws, which are set procedures for discharging a debtor’s obligations. Bankruptcy

25. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Certain debts cannot be discharged under bankruptcy laws. Bankruptcy Education loans, during the first five years of the repayment period Taxes

26. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Bankruptcy Alimony Child support Maintenance payments

27. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Explain which method of involuntary discharge would be suitable in each of the following cases.

28. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End 1.Kimi added a “0” after the date March 3 to attempt to extend the date a contract was to be completed.

29. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End ANSWER Wrongful alteration

30. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End 2.Kharim was hired to paint a mural for the middle school gym one week before a tornado ripped through the school.

31. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End ANSWER Destruction of exact subject matter

32. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End 3.Between amassed credit card debt, car payments, and school loans, Bob, who could not find a well- paying job when he graduated from college, was totally unable to pay his bills.

33. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End ANSWER Bankruptcy

34. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Reviewing What You Learned 1. 1.When will the law permit a discharge by impossibility? Section 11.2 Assessment

35. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Reviewing What You Learned Death or illness of a party in a personal service contract, destruction of the exact subject matter of the contract, and when the contract becomes illegal Section 11.2 Assessment Answer

36. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Reviewing What You Learned 2. 2.When will the law permit a discharge by operation of law? Section 11.2 Assessment

37. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Reviewing What You Learned When a wrongful alteration has occurred, when the statute of limitations has run its course, and in cases of bankruptcy Section 11.2 Assessment Answer

38. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Reviewing What You Learned 3. 3.What is the statute of limitations? Section 11.2 Assessment

39. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Reviewing What You Learned Specifies the length of time within which legal actions can be brought Section 11.2 Assessment Answer

40. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Reviewing What You Learned 4. 4.What debts cannot be discharged in bankruptcy? Section 11.2 Assessment

41. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Reviewing What You Learned Education loans, taxes, alimony, child support, and maintenance payments. Section 11.2 Assessment Answer

42. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Section 11.2 Assessment Critical Thinking Activity Bankruptcy What is the legal philosophy behind the idea that certain contracts cannot be discharged in bankruptcy?

43. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Section 11.2 Assessment Critical Thinking Activity Answer Bankruptcy Answers will vary, but should recognize that certain debts are too important to society be discharged.

44. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Section 11.2 Assessment Legal Skills in Action Debts after Bankruptcy Your friend Charlotte says her parents are about to go to bankruptcy court. She believes that all of the family’s debts will vanish as a result of the bankruptcy proceedings.

45. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Section 11.2 Assessment Legal Skills in Action Debts after Bankruptcy Write a letter to your friend explaining that some of her family’s debts will remain even after declaring bankruptcy.

46. Understanding Business and Personal Law Impossibility of Performance and Operation of Law Section 11.2 How Contracts Come to an End Section 11.2 Assessment Legal Skills in Action Answer Debts after Bankruptcy Letters will vary, but may include that educational loans, taxes, alimony, child support, and maintenance payments are not affected by a general discharge of debts in bankruptcy.

47. Impossibility of Performance and Operation of Law End of Section 11.2