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BUS311_chapter_06 - 6 Third Parties Performance and...

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iStockphoto Chapter Overview Learning Objectives After studying this chapter, you will be able to: 1. Describe how third parties acquire rights and duties on a contract. 2. Distinguish between assignments and third-party beneficiary contracts. 3. Describe what contractual duties may be assigned and delegated. 4. Describe the different ways a contract may be discharged. 5. Define the different types of damages. 6. Explain when specific performance would be available as a remedy. 6.1 Third Parties Third-Party Beneficiaries Assignments Delegations 6.2 Performance and Discharge of Contracts Discharge by Condition Discharge by Performance Timeliness Anticipatory Breach Impossibility of Performance Commercial Impracticability Frustration of Purpose Discharge by New Agreement Discharge by Operation of Law 6.3 Remedies for Breach Damages Specific Performance Election of Remedies 6.4 Chapter Summary Focus on Ethics Case Study: Rosenberg v. Son, Inc. Case Study: Campbell Soup Co. v. Wentz Critical Thinking Questions Hypothetical Case Problems Key Terms Third Parties, Performance and Discharge of Contracts, and Remedies 6
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CHAPTER 6 Section 6.1 Third Parties I n this chapter we will examine several distinct concepts. First, we will look at the role of third parties in contracts. Up to this point, we have been largely concerned with only the two people who made the contract. However, sometimes outsiders who were not a part of the contract may acquire the right to the contract’s benefits, or a duty to perform the contract. The topics of third-party beneficiaries, assignments, and delegations deal with these matters. Second, we will look at the various situations that arise after a valid contract has been made that may result in discharge of the contract. A discharge means that one or both of the contracting parties is excused from performance and/or liability on the contract. Lastly, we will look at the remedies available in the event there is a breach of contract. 6.1 Third Parties W hen considering the role of third parties, we must initially determine if we are focusing on the rights or responsibilities of the contract. If the focus is on the rights or benefits, the ways in which a third party might acquire those are if the outsider is an intended third-party beneficiary or if there has been an assignment of the contract by one of the original contracting parties. An assignment is the transfer of benefits or rights under a contract to a third party. If instead the focus is on whether a third party has a duty to perform on the contract, the issue is whether one of the con- tracting parties has delegated to the outsider. If, for example, John agrees to paint Mary’s house for $1,000, Mary’s rights under the contract would include having her house painted (in a reasonable manner), and John’s rights under the contract would include being paid $1,000 for his labor. If John had, under
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