Discharging a Contract

Discharging a Contract - Discharging a Contract Conditions...

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Discharging a Contract Conditions have to be met before the contract can be met A condition precedent- conditions that have to occur before the contract can happen Ex) I sign a contract to purchase your home, the condition precedent says it can get mortgage financing. If I am unable to get mortgage financing then I am not liable or held for that contract. Condition subsequent- a future event that terminates the obligations of the parties when it occurs Ex) Joan may enter into an agreement to lease an apartment for 5 years, conditioned on her not being called to active duty in the National Guard. If she is called to serve, her obligation to be bound by the lease is discharged. Concurrent conditions occur when each party’s performance is conditioned on the performance of the other. Expressed conditions- are explicitly stated in the contract and are usually preceded by words such as condition on, if, provided that, or when. Ex) a situation involving a potential sale of a house, the offer expressly required that the buyer make a deposit of $1,000 on acceptance. The buyer wrote “accepted” on the offer and returned it but didn’t include the $1,000. Therefore there was no contract because he neglected to include the $1,000 with the acceptance. Implied conditions- those not explicitly states but are inferred from the nature and language of the contract. Ex) if one enters a contract with a builder to replace the windows in one’s house, there is an implied condition that the builder will have access to the house so that he can perform his duties. An express condition is clearly stated, whereas an implied condition is not stated but can be inferred from the nature and language of the contract. Discharging a contract means that the contract has performed or has been performed. Once both parties have performed the contract is done with Ex) my mother in law was building a new house and she was so OCD about this new house that she would put sticky notes everywhere there was a tiny flaw. If you contract with me to build you a 2 story, 3000sq. feet, 4 bedroom, 3 bath house. And I build you something that’s 2997 sq. feet that is substantive performance and you have to accept it because that’s very close. Complete performance- occurs when all aspects of the parties’ duties under the contract are carried out perfectly. Substantial performance- occurs when the following conditions have been met: Completion of nearly all the terms of the agreement An honest effort to complete all the terms No willful departure from the terms of the agreement Some cases the court may require the party be compensated for any loss in value caused by failure to meet needs Ex) you are a contractor and you are to paint all the rooms blue. However you paint one of them green, the court may require you to compensate the buyer for the amount it will cost to repaint
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Discharge by material breach- when a party unjustifiably fails to substantially perform his
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This note was uploaded on 03/23/2012 for the course ACCT 324 taught by Professor Eppink during the Spring '10 term at South Carolina.

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Discharging a Contract - Discharging a Contract Conditions...

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