blaw10-aa - Elements of Law Part One UNIT 10A Contract...

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Unformatted text preview: Elements of Law - Part One UNIT 10A Contract Performance © 2007 Captus Press Inc. Module 1 Introduction © 2007 Captus Press Inc. © 2007 Captus Press Inc. 1 Elements of Law - Part One Contract performance Once a contract is formed, it could go on for ever But contracts usually come to an end because the parties do what is required Once the promises are fulfilled the contract has been performed and it is ended Module 2 Contract Performance © 2007 Captus Press Inc. © 2007 Captus Press Inc. 2 Elements of Law - Part One Contract performance By tender of performance By tender of payment Tender by performance Do the things that were promised under the contract Do them precisely as promised: if delivery is to be on Wednesday at 9 a.m., delivery on Wednesday at 10 a.m. will not be acceptable as a proper tender of performance. © 2007 Captus Press Inc. 3 Elements of Law - Part One Specific performance or damages If you want the other party to perform their promise when they have told you they won’t, you must tender performance If you are only interested in damages for breach of contract, when the other party tells you that it will not perform its promise, you may treat this as an anticipatory breach of contract, and sue for damages without tendering performance. Tender of payment Tender of payment must be precisely as required by the contract If the form of payment is not specified it may be paid in legal tender Bills of any denomination, but totaling the exact amount of the debt Coins with limits on the denomination that can be used depending on the total amount to be paid [no dump trucks full of pennies] © 2007 Captus Press Inc. 4 Elements of Law - Part One Insistence on legal tender A creditor who insists on payment in legal tender as a way of obstructing the debtor in paying the debt, may find himself or herself deprived on interest or costs or both by the courts. Module 3 Discharge By Means Other Than Performance © 2007 Captus Press Inc. © 2007 Captus Press Inc. 5 Elements of Law - Part One Discharge as a right One or both parties may bargain for inclusion of a term that allows one or the other or both to terminate the agreement, if the event in the contract term occurs. This is an option to terminate A term in a contract that allows one or both parties to terminate an agreement before performance has been completed Conditions precedent An event or non event that must occur or not occur before a contract must be performed. The contract does not come into existence until the condition precedent has been fulfilled. The parties have no obligation to perform until the condition precedent has been fulfilled © 2007 Captus Press Inc. 6 Elements of Law - Part One Condition subsequent A future event that, if it occurs, terminates a contract and relives the party of further performance obligations. Until the event occurs, the contract exists and the parties must perform their obligations A force majeure clause is a condition subsequent that consists of an event the parties did not foresee or anticipate which renders further performance impossible, so that the effects of the event cannot be avoided even by exercise of due diligence by the parties. Module 4 External Events Bringing a Contract to an End © 2007 Captus Press Inc. © 2007 Captus Press Inc. 7 Elements of Law - Part One Implied terms Some conditions subsequent are implied by the courts from customs or practices of a particular trade, even when there is no express provision in the contract permitting termination. Doctrine of frustration of contract A legal doctrine that permits the parties to a contract to be relieved of their contractual obligations because of the occurrence of some even beyond their control that makes further performance impossible. © 2007 Captus Press Inc. 8 Elements of Law - Part One Factors affecting frustration of contracts Factors affecting frustration of contracts Impossibility arises from the acts of a third party © 2007 Captus Press Inc. 9 Elements of Law - Part One Factors affecting frustration of contracts Impossibility arises from the acts of a third party Impossibility arises from some natural or external force Factors affecting frustration of contracts Impossibility arises from the acts of a third party Impossibility arises from some natural or external force The impossible situation cannot be prevented by the parties © 2007 Captus Press Inc. 10 Elements of Law - Part One Factors affecting frustration of contracts Impossibility arises from the acts of a third party Impossibility arises from some natural or external force The impossible situation cannot be prevented by the parties The impossibility is not brought about by any act of the party seeking to terminate Factors affecting frustration of contracts Impossibility arises from the acts of a third party Impossibility arises from some natural or external force The impossible situation cannot be prevented by the parties The impossibility is not brought about by any act of the party seeking to terminate The impossibility is caused by the death or incapacity of a party where the party’s personal attributes were crucial to contract performance—the “famous painter” scenario © 2007 Captus Press Inc. 11 Elements of Law - Part One Factors affecting frustration of contracts Impossibility arises from the acts of a third party Impossibility arises from some natural or external force The impossible situation cannot be prevented by the parties The impossibility is not brought about by any act of the party seeking to terminate The impossibility is caused by the death or incapacity of a party where the party’s personal attributes were crucial to contract performance—the “famous painter” scenario The impossibility is caused by the subject matter of the contract ceasing to exist Factors affecting frustration of contracts Impossibility arises from the acts of a third party Impossibility arises from some natural or external force The impossible situation cannot be prevented by the parties The impossibility is not brought about by any act of the party seeking to terminate The impossibility is caused by the death or incapacity of a party where the party’s personal attributes were crucial to contract performance—the “famous painter” scenario The impossibility is caused by the subject matter of the contract ceasing to exist The impossibility is caused by a change in the law that was not contemplated by the parties © 2007 Captus Press Inc. 12 Elements of Law - Part One Case law approaches to frustration The assumption that the parties accepted an implied term of the contract permitting termination The construction of the purpose of a contract as the basis for deciding whether the contract could be terminated because the purpose could not be fulfilled. Apportioning losses on frustrated contracts At common law when a contract is frustrated the position of the parties is crystallized, and the losses lie where they fall at the time of crystallization In some later cases, the courts have imposed a just and reasonable test to apportioning losses after crystallization. © 2007 Captus Press Inc. 13 Elements of Law - Part One The Fibrosa case Dealt with the inequity of windfalls at crystallization Held that deposits paid before crystallization could be recovered after crystallization But also held that expenses incurred in carrying out the contract prior to frustration were not recoverable The Frustration of Contracts Act Contracts excluded from coverage by the act: Contracts covered by a specific statute that has frustration provisions. Contracts where the parties have created express terms to deal with frustrating events. Certain contracts for the carriage of goods by sea Insurance contracts Contracts for the sale of goods where the goods cease to exist before the contract is entered into without fault by either party and before risk passes to the buyer. © 2007 Captus Press Inc. 14 Elements of Law - Part One Apportionment of loss under the Frustrated Contracts Act • Money paid before discharge is recoverable Debts accrued by not yet paid are not to be paid. So if work was done, and you have been billed but haven’t paid, you don’t have to pay now. • Total failure of consideration is not required. Even if some value was received, a contract may still be held to be frustrated if its principal purpose was thwarted by the frustrating event. • Where a party has incurred expenses to carry out its obligations, it may be entitled to keep all or part of any deposit paid by the other party. • The court has the power, where there is not total failure of consideration, to require a party to pay a reasonable amount if the Money paid before discharge is recoverable The Bankruptcy and Insolvency Act The Bankruptcy Act provides that when a bankrupt is discharged from bankruptcy his or her existing contracts are also discharged There are some exceptions to this rule: Child support must continue to be paid Student loans must be repaid. © 2007 Captus Press Inc. 15 Elements of Law - Part One The Limitations Act actions or lawsuits to enforce the obligations under a contract may not be enforced after a certain time period has passed. The common law doctrine of laches This is a common law doctrine that states that the failure to begin a lawsuit within a reasonable time period , together with prejudice suffered by the other party as a result of the delay, will result in the barring of the action. © 2007 Captus Press Inc. 16 Elements of Law - Part One Comparison of laches and limitation periods Both are SIMILAR in that they require contract rights to be enforced in a timely manner. They are DIFFERENT in that laches depends on the flexible concept of acting within a “reasonable time”, and a limitation period depends on a fixed and inflexible time period. A result of this DIFFERENCE is that an action may be brought within a limitation period, yet it may be barred by the doctrine of laches because the defendant is prejudiced by the plaintiff’s delay. Waiver When a party agrees with the other not to proceed, the party has given a waiver, and waived his or her contract rights If neither party has performed, a mutual release constitutes consideration If one party has performed and the other has not, there must be token consideration, or the contract must be under seal © 2007 Captus Press Inc. 17 Elements of Law - Part One Substituted agreements If the parties to a contract agree to waive rights under an agreement and enter into a new one, this is a substituted agreement Rights and obligations under the old agreement cannot be enforced, once the new one takes effect and discharges the old one. Material alteration of terms If the alteration of terms is minor, the contract is amended and continues to be enforceable If the alterations of terms is material, the changes will result in a new contract replacing the old A material alteration occurs when the alterations change the meaning or purpose of the contract. © 2007 Captus Press Inc. 18 Elements of Law - Part One Novation If the one party agrees to accept a new party as substitute for the other party, the result is novation, a new agreement with new parties. The new party is not responsible for obligations under the old agreement, unless there are express terms to the contrary. Accord and Satisfaction An accord and satisfaction is a means of discharging a contract where the parties agree to accept some form of compromise or settlement instead of full performance of the contract. © 2007 Captus Press Inc. 19 Elements of Law - Part One Discharge resulting from breach of contract The injured party may treat a breach of contract as a discharge of the contract The injured party has no further obligation to perform The injured party may not claim specific performance or rescission The injured party’s remedy is damages for the breach. © 2007 Captus Press Inc. 20 ...
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