1. Methods to Terminate a Contract
4.02 Differentiate methods of terminating or transferring a contract.

2. Discharge by Performance
Complete
All terms have been carried out properly and completely.
Time
Court will honor time request, if it is deemed “of the essence.”
If not mentioned in contract, then a reasonable time will be assumed.

3. Satisfactory Substantial
Law requires that services be completed in a satisfactory manner.
Reasonable person test
Would a reasonable consider the work to done in satisfactory manner?
Substantial
Slightly less than full performance
Must meet the following rules:
Acted in Good Faith
Completed Major Components of Contract
Only Minor Details Incomplete.

4. Tender of Performance Tender – Offer to Perform
Must make tender even if you know the other party will not perform their part of the contact.

5. Discharge By Agreement
Mutual Release
Each side releases the other side from the contract.
Accord and Satisfaction
Substitute one contract for another.

6. Discharge By Impossibility of Performance
Death or Illness in a Personal Service Contract
Only allowed in Personal service contracts.
What is personal service?
Photographer
Artist
Any other contract must be completed.

7. Destruction of the Exact Subject Matter
If the subject matter is essential to the contract then it will be discharged.
Illegality
Any illegal contract is void.

8. Discharge by Operation of Law
Wrongful Alteration
Any altering or changing of a contract will discharge parties to the agreement.
Statute of Limitations
Individual states have a time limit on lawsuits to be filed.
What is the only crime/tort that doesn’t have a time limit?
Murder

9. Bankruptcy
Debtors can be discharged from contracts after filing for bankruptcy.

10. Transferring or Breaching Contracts and Remedies

11. Assignment Legally transferring your RIGHTS in a contract.
Assignor – party who transfers the right.
Assignee – party to whom the right is transferred.
No consideration needed.
Must not change the obligations in the contract.
Must be a RIGHT not a DUTY.
Assignor is responsible for contract fulfillment.

12. Delegation Transfer a duty.
Delegating party is still responsible for the contract being fulfilled.
Contracts that CANNOT be delegated:
Promise to perform service personally.
Exercise of personal skill or judgment.
Contract prohibiting delegation.

13. Novation Replacing a party to a contract with a new one.
The other terms to the contract remain the same.

14. Third Parties Privity of Contract Third-Party Beneficiary
Determines who can sue who over a breach of contract.
Third-Party Beneficiary
A person who is not a party to a contract but benefits from it.
Has the right to sue over breach of contract.

15. Breach of Contract
Wrongful failure to perform one or more promises in a contract.
Anticipatory Breach
Notified that a party to the contract will not fulfill their part of the contract prior to the required time of fulfillment.
Lawsuit may be filed early in this case. Exception to the rules: Refusal to pay money owed at a future date.

16. Remedies/Damages Acceptance of Breach
Accept the breach of contract and discharge the other party without asking for damages.
Why?
Must show damages in order to win monetary damages.
Not worth the party’s time to file lawsuit.

17. Money Damages Actual – Damages DIRECTLY related to breach.
Compensatory – Award only for injuries suffered nothing more.
Consequential – Damages that DO NOT flow directly from breach.
Incidental – Reasonable expenses that INDIRECTLY from breach of contract.
Liquidated – Anticipated damages agreed prior to contract being signed.
Nominal – Award to proved legal injury but no actual damages caused.
Punitive – Damages in excess of losses suffered in order to punish party for breach.
Speculative – Damages awarded not on fact but on expectations from contract fulfillment.

18. Specific Damages
Ask court to order the other party to do what they agreed to do.
Subject matter must be unique in nature.
Which of the following is unique?
Real Estate
Stocks of General Electric
’65 Ford Mustang with 44,000 miles
A brand new Ford F-150
Dozen Eggs
Answers: Real Estate and Mustang are unique.

19. Injunction Court order that prevents a party from performing an act.
Temporary or Permanent.
Violators are in contempt of court.

20. Minimizing Damages
Injured party must try to reduce the damages by all means possible (mitigation of damages).
What could you do to mitigate damages if a tenant breaks the lease and moves out early?
Possible answers:
Advertise for rent sign in yard, put sign up at local university,
and place an advertisement in the local newspaper.