Chapter 12 Business Law

-no longer has duties under the contract.
-most contracts are discharged by full performance

Terminate a contract

Requires one party to perform its obligations precisely, with no deviation from the contract terms.

-demands must be expressed and reasonable

One of the party fulfills enough of its contract to warrant some payment

-receives nothing from the contract

-only recovers the value of the work, if any

1. How much benefit has the promisee received

2. If construction contract, can owner use the thing for intended purpose?

3. Can the promisee be compensated with money damages?

4. Did promisor act in good faith?

to whom a promise is made

makes a promise

Parties to a contract must carry out their obligations in good faith.

-Generally make contract dates strictly enforceable

-including a date doesn't make time of the essence and both parties are entitled to reasonable days.

-Must state that prompt performance is essential

-Courts dislike b/c short delay means no money

When one party breaches a contract, the other party is discharged.

-breach that substantially harms the innocent party and for which it would be hard to compensate without charging the contract.

ex: Diamond seller does not give the jewelry store the diamonds they purchased. Jewelry store cannot make wedding rings.

a material breach

A time limit an injured party must file suit.

-Time begins at time of injury

Something has happened making it literally impossible to what the promisor said he would do.

1. Destruction of subject matter
2.Death of Promisor
3.Illegality

-event has occurred that neither party anticipated
-fulfilling the contract would now be extraordinarily difficult and unfair to one party

-event has occurred that neither party anticipated
-contract now has no value

1. financial difficulties will never suffice to discharge contract.

2. Different means to accomplish task is expensive

3. Truly unexpected

method a court uses to compensate an injured party

a legal right in something

-what the injured party reasonably thought the would get from the contract.

-typically is the profit the plaintiff would've earned

put injured party in the position they would have been if both parties had fully performed their obligations.

Damages that flow from directly from the contract

reimburse for harm that results from particular circumstances of the plaintiff

1. lost profits were foreseeable

2. plaintiff provides enough information so fact finder can reasonably estimate a fair amount

-designed to put an injured party in position he would have been in had the parties never entered into a contract

-focuses on time and money the injured party spent performing his part of the agreement.

designed to return to the injured party a benefit he has conferred on the other party

-When money damages are inadequate to compensate the injured party

-a court may order a party to perform under circumstances.

-sale of land or
-asset that is considered unique

An order NOT to do something

an order prohibiting a party from doing something during a lawsuit

Injured party must try to prevent unnecessary loss

To keep damages as low as is reasonable

A clause stating in advance how much a party must pay if it breaches

1. At the time of creating a contract, it was difficult to estimate actual damages.

2. the liquidated amount is reasonable