1. Factors Affecting Contracts Ending a Contract
Contract Law
Factors Affecting Contracts
Ending a Contract

2. Mistake Error that destroys consensus
- fundamental mistake about subject matter of contract
Shared - common to both parties
- contract void
- court may correct written error that does not reflect understanding of parties – rectification

3. Mistake/2 Misunderstanding differing interpretations
Both interpretations reasonable – void
Both interpretations unreasonable – void
One interpretation reasonable, one not
Court will enforce the reasonable interpration of the contract

4. Mistake/3 One-sided Mistake Non Est Factum (It is not my act)
- when one party misleads themselves
Caveat emptor
Non Est Factum (It is not my act)
mistake goes to the nature of the document
usually involves misrepresentation

5. Rules of Interpretation
Reasonable person test
Literal or liberal meanings imposed on written terms
Courts or statutes may imply terms
Parol Evidence Rule
Outside evidence will not change clear wording

6. Misrepresentation False Statement of fact
Statement of opinion of professional
That persuades someone to enter into a contract.
Silence is not misrepresentation when there is no duty to disclose

7. Innocent Misrepresentation
The person making it honestly believes it to be true.
Remedies are limited to rescission
Rescission puts both parties back into original positions
Not available if impossible to restore
Not where a third party is involved

8. Fraudulent Misrepresentation
Intentionally or recklessly misrepresenting
Can sue for damages in addition to rescission
An innocent misrepresentation becomes fraudulent if not corrected when discovered \

9. Negligent Misrepresentation
Carelessly misrepresenting
Should have known what they were saying was false
Rescission and damages availabe

10. Duress and Undue Influence
threat makes contract voidable
Monetary, physical, embarrassment
Undue Influence
If person in position of trust abuses that relationship to induce a contract
presumed in certain relationships
Voidable

11. Duress and Undue Influence/2
Unconscionable Transactions
Where a person takes advantage of another’s vulnerability
Naivety, age, financial situation, stress
voidable

12. Privity of Contract Contract can only affect parties to it Exceptions:
Original party can enforce contract when benefits bestowed on outsider
Novation - a new party is substituted for an original party to the contract
Contractual Rights run with land
Contracts created through agents

13. Assignment
The benefits (chose in action) received under a contract can be assigned or transferred to another
Qualifications for statutory assignment
absolute and unconditional
must be in writing and complete
must give proper notice

14. Assignment/2 Some things cannot be assigned:
the right to sue (champerty)
when contract involves the personal performance of a particular skill

15. Assignment/3 Assignee is in the same position as original contractor
Subsequent claims do not affect assignee
Contractual rights assigned automatically in case of death or bankruptcy

16. The End of the Contractual Relationship
Principal methods of discharging a contract
Performance
Agreement
Breach
Frustration

17. Performance
Contractual obligations are discharged when each party satisfactorily performs its part of the bargain.

18. Performance/2 Substantial performance
all or most of contractual obligations are fulfilled
contract discharged
some contracts must be performed exactly

19. Tender of Performance
When one party is ready, willing, and able and attempts to perform but performance is refused by other party.
may be vicarious
person who attempted performance may sue other for damages
Payment must be in legal tender
Delivery at reasonable time and place

20. Breach A contract is breached when there is:
improper or incomplete performance or
refusal to perform
Conditions - terms essential to substantial performance
where breached, victim relieved of obligations
Warranties - minor terms of contract
where breached, performance still required

21. Fundamental Breach
The failures to perform are so basic they leave one party without any benefit in the contract.
Courts will not give effect to some exemption clauses unless specific
Repudiation (anticipatory breach)
One party indicates that they do not intend to follow through with their end of the deal
Can be expressed or implied from conduct
Victim may choose to end or insist on performance - bound by choice

22. Discharge by Agreement
Contracts can be modified or ended by agreement
Bilateral or unilateral discharge
all rules of contract formation apply
Accord and satisfaction - parties agree to end contract based on some other consideration

23. Contractual Terms
Contract can specify conditions under which obligations begin or end
Conditions precedent—contract is binding only if some pre-existing condition is met
Conditions subsequent—the contract ends when some event or condition takes place

24. Frustration Outside, unforeseen event which Statutory modifications
Makes performance impossible
Changes the nature of the contract
Statutory modifications
“Let the loss fall where it lies.”
Allows courts to split deposit to pay costs incurred

25. Self-Induced Frustration
When one party is responsible for an act that frustrates a contract, it is treated as a breach.
If the obligations of the contract can be fulfilled in some other way, performance is required.

26. Remedies for Breach of Contract
Rescission - returning parties to original position
Rectification - court corrects wording of a document
Provided in Contract
liquidated damages, deposits, down payments
victim must mitigate losses

27. Damages
Court tries to put victim of breach in the position they would have been in if the contract had been properly performed
Limitations
Remoteness - breaching party must compensate for damages likely to be the result of the breach
Mitigation - victims must make an effort to keep their losses as low as possible

28. Equitable Remedies Specific performance Injunction Accounting
An order to go through with the deal
Injunction
An order to stop breaching the agreement
Accounting
Court may order breaching party to disclose and pay profits
Quantum meruit
court orders payment for part performance