2. Discharge A party is discharged when she has no more duties under a contract. Most contracts are discharged by full performance. Sometimes the parties discharge a contract by agreement. Rescind means that they terminate it by mutual agreement.

3. Conditions A condition is an event that must occur before a party becomes obligated under a contract. How Conditions are Created – Express Conditions -- No special language is necessary to create the condition, but it must be stated clearly somehow. – Implied Conditions – The condition is not stated, but is clear from the agreement.

4. Types of Conditions Condition Precedent – Must occur before a duty arises. Condition Subsequent – Must occur after the particular duty arises. Concurrent Conditions – Certain things must occur simultaneously.

5. Performance Strict Performance – Performance that is exactly what promised; is usually not expected and failure to do so does not cause for discharge. Substantial Performance – A party that substantially performs its obligations will receive the full contract price, minus the value of any defects. – A party that fails to perform substantially receives nothing on the contract and will only recover the value of the work, if any.

6. Personal Satisfaction Contracts A personal satisfaction contract is one which the promisee makes a personal, subjective evaluation of the promisor’s performance. – A court uses a subjective standard only if assessing the work involves feelings, taste, or judgment and the contract explicitly demands personal satisfaction. – In all other cases, a court applies an objective standard to the decision.

7. Good Faith The Restatement (Second) of Contracts §205 states: “Every contract imposes upon each party a duty of good faith and fair dealings in its performance and its enforcement.”

8. Time of the Essence Clauses A time of the essence clause will generally make contract dates strictly enforceable. Merely including a date for performance does not make time of the essence.

9. Breach Material Breach – Generally courts will discharge only if a party committed a material breach. Anticipatory Breach – Anticipatory breach is committed by one party making it unmistakably clear that he will not honor the contract. Statute of Limitations – Will limit the time within which the injured party may file suit.

10. Impossibility True Impossibility – Something has happened making it utterly impossible to fulfill the promise. Generally limited to destruction of the subject matter, death of the promisor in a personal service contract and subsequent illegality of the contract. Commercial Impracticability – Some event has occurred that neither party anticipated, making the contract extra-ordinarily difficult and unfair to one party. Frustration of Purpose – Some event has occurred that neither party anticipated and the contract now has no value for one party.