1. CONTINUATION SA REPORT NI TAHNEE

2. ELEMENTS OF CONTRACTS

3. Discharge of Contracts Ways of Discharging a Contract: The Discharge by Performance The Discharge by Performance - Is the most common method of the discharge in accordance with its terms. If the contract is fully performed by all parties, all rights and all obligations under the contract cease to exist for the parties. Tender of performance Contracts are often discharged by a tender of performance on the part of one of the parties. In contracts calling for a money payment, the tender must be made in money. In such cases the person making the tender is relieved from the provisions of the contract provided the other party has failed or refuses to do his part. If the tender is for a smaller amount than is actually due on the contract, the other party may recover the amount actually due together with costs. In case of tender of services, where services only are contemplated in the contract, if the person to whom the services are tendered refuses the same, then the person so tendering the services is entirely relieved from any responsibility under the contract and may sue the other party and recover damages for the failure of the other party to comply with his part of the contract.

4. Example: Mr. Enteng Kabesote, a contractor, agrees to purchase a motor from an electric company, the motor to be of a special design and to be ready for delivery at a specified date. The motor is not ready on the date agreed upon the contractor who was to have received it refuses to accept the motor when it is finished later and sues the electric company for damages. He cannot collect unless he can establish that he was ready and willing and offered to pay for the motor at the time when the agreement called for the delivery of it.

5. Impossibility of Performance Impossibility of Performance - A method of discharging the contract that is of more interest to the engineer. The engineering contractor is continually running into conditions of soil, stream-flow; climate and other conditions which could not have been and were not foreseen prior to the undertaking of the work; and it is important the he understand the effect of these unforeseen conditions on the contract before entering into such a contract.

6. Example: Mr. Mulawin, an engineering contractor, contracts with Mr. Mano Po that he will construct the foundation for a structure of a general type and of the approximately a given depth. In making excavations for the foundation he finds soil conditions which make it necessary, in order to ensure the safety of the foundation, to enlarge the planned foundation greatly by increasing the depth to which the foundation is laid, and this increase practically doubles the cost. The question now is: What is the effect of this unforeseen condition which practically renders the contract as originally contemplated impossible of performance? If he agreed in the contract without reservation to build the foundation to a certain depth to ensure the safety of the structure, he must go ahead and complete the contract as originally contemplated. If, however, he provided in the contract that in case of conditions such as these he was to receive extra pay or that a new contract was to be entered into relative thereto where the conditions were found, he then is excused from any further performance of the contract in that particular. Mr. Mulawin, an engineering contractor, contracts with Mr. Mano Po that he will construct the foundation for a structure of a general type and of the approximately a given depth. In making excavations for the foundation he finds soil conditions which make it necessary, in order to ensure the safety of the foundation, to enlarge the planned foundation greatly by increasing the depth to which the foundation is laid, and this increase practically doubles the cost. The question now is: What is the effect of this unforeseen condition which practically renders the contract as originally contemplated impossible of performance? If he agreed in the contract without reservation to build the foundation to a certain depth to ensure the safety of the structure, he must go ahead and complete the contract as originally contemplated. If, however, he provided in the contract that in case of conditions such as these he was to receive extra pay or that a new contract was to be entered into relative thereto where the conditions were found, he then is excused from any further performance of the contract in that particular.

7.  If a contract is made for personal services and the person whose services were contracted for died, then the contract is discharged by the death of the person because of the impossibility of his rendering such as services.  If the subject matter of the contract or the thing whose continues existence is essential to the carrying out of the contract is destroyed through no fault of the promisor, as by an act of God, the contract is discharged.  Where the performance of a contract is rendered impossible by a change in the existing law, then the contract is discharged.

8. Substantial Performance Substantial Performance - Another matter of vital interest to the engineer and the engineering contractor is the subject of substantial performance, for a most cases of engineering contracts there is no exact performance of the contract but a substantial performance. -In a general way, it is a practical completion of the work so that no material parts thereof remain to be done or so that there have been no material alterations from the original contract.

9. Discharged by Agreement Discharged by Agreement - A contract may also be discharged by agreement between the parties thereto. If the contract has not been performed by either party, it may be discharged by the mutual agreement of the parties, the consideration for the discharged being the mutual release of each party by the other. Contracts may also be discharged by agreement between the parties to the old contract by the making of a new contract, the terms of which are inconsistent with the terms of the old contract or the terms of which provide that it shall be substituted for the old one. A contract may also be discharged by a release under seal which import a consideration or a release founded upon a sufficient consideration and signed by the parties to the contract or by changing the parties to the contract whereby a new party is substituted for the previous one by agreement of all three parties to the substitution while the terms of the contracts may remain the same. The party for whom the new party was substituted is thereby discharged from any liability and from all rights under the contract, provided there has been no performance by either of the parties. -It often happens in an engineering contract that unforeseen conditions arise after the contract has been started and the parties to the old contract enter into a new contract which fits the new conditions. They are thereby discharged from the conditions of the old contract and bound by the conditions of the new one

10. Discharged by Operation of Law Discharged by Operation of Law - Contracts may be discharged by operation of law either by the merger of one contract into another, alteration of the contract by one party thereto without the consent of the other party, or by the bankruptcy, either voluntary or involuntary, of one of the parties to the contract. Alteration of a Written Instrument If one of the parties to a written contract alters, or causes to be altered, material parts of the contract without the consent of the other party, the other party to the contract will be discharged of all liabilities under the contract but will be entitled to any benefit accruing therefrom. If the instrument altered is a negotiable instrument and is altered by the party holding the same, the parties liable thereon a relieved from all liability thereunder unless the instrument is later negotiated and gets into the hands of an innocent purchaser for value, who may then enforce the original obligation of the contract. Alterations on notes, bonds, checks, and negotiable bills of lading and other negotiable instruments come within this class.

11. Discharged by Bankruptcy Any person who has been declared bankrupt and whose estate has been administered and who has received a discharged in bankruptcy will be relieved from all liabilities and all contracts of whatever nature which he has entered into prior to being declared bankrupt.

12. Discharged by Breach of Contract Discharged by Breach of Contract - If either party to a contract either announces his intentions not to fulfill the terms of the contract or wholly or partly fails to perform some of the conditions of the contract, there is a breach of the contract which gives rise to rights on the part of the injured party either to give him a right of action against the other party or in some cases he may apply to a court of equity for a specific performance of the contract. In the case where a person contracts for the conveyance of land upon the payment of certain money, if the person agreeing to pay the money is ready and willing and tenders the money, and the party who agreed to convey the land refuses to convey it, the injured party may then go into a court of equity, and the court will enter a decree of compelling the conveyance of the land to the party to whom the land was agreed to be conveyed. As a rule a breach of the contract by either party thereto discharges the contract and relieves the other party to the contract from all liabilities thereunder and gives him a right to sue the party so failing to fulfill the terms of the contract for damages for such breach.

13. Discharged by Statute of Limitations Discharged by Statute of Limitations - Certain contracts must be sued upon within a given time after the right of action arising under the contract has accrued or else all liability thereunder ceases.

14. Example: If Ms. Shake gives a note to Mr. Rattle for $50 payable one year after date, Mr. Rattle acquires the right to sue Ms. Shake at the end of the year on the note. If the statutes of the state provide that the action on such note must be commenced within six years after the cause of action accrued and if the action is not commenced within six years from that time, then Mr. Rattle cannot recover from Ms. Shake the money lent on the note; and the contract is discharged to a lapse of time. If the instrument is a sealed instrument, the statutes of limitation usually run for twenty years; that is, if an action arose upon a contract under seal, and a breach of the contract was made on the first day of January, 1980, action to recover damages on the contract must be commenced on or before the first day of January, 2000, or the contract provisions and all liabilities and rights thereunder would be discharged on the second day of January, 2000, by a lapse of time.

15. Remedies for a Breach of Contract -Where there has been a breach of contract, certain rights are acquired by the injured party. He may either sues and recover damages actually suffered by him, or he may enter into an agreement with the other parties of the contract to accept a certain amount in payment of the breach. This is commonly known as an accord and satisfaction; and the usual method pursued then is for the injured party, upon the payment agreed upon, to give a formal release of the contract and all liabilities and rights arising because of the breach of the contract to the other party so paying the money. -Where the injured party sues and recovers a judgment against the other parties thereto, that operates a discharge of the contract and gives rise to new rights on the part of the injured party and new liabilities on the part of the other party to the contract, which may be enforced by judicial procedure by attaching the property of the party against whom the judgment is obtained and selling the same to pay the amount recovered in the judgment.

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