Performance

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CHAPTER 17
Performance and Discharge
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Quote of the Day

• If you cant give me your word of honor, will
  you give me your promise?
• Samuel Goldwyn,
• Hollywood producer

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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.

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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.

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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.

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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.

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Personal Satisfaction Contracts

• A personal satisfaction contract is one which the
  promisee makes a personal, subjective evaluation
  of the promisors 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.

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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.

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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.

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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.

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Impossibility

• True Impossibility
• Something has happened making it utterly
  impossible to fulfill the promise.
• 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.

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Good faith and reasonable conduct will prevent
many contract disputes.