PCL 1L Contracts
Part I
Review
Discharges
Flow of events
If we make it through formation and find no defenses to formation, then we're in the performance part of the contract. Conditions are about when (sometimes if) a party needs to perform. If the condition is satisfied or excused, then they have to perform and we move to the next stage where there's three options…
- The party's promise/contract is performed
- The contract is discharged
- The party is in breach
If 1, then 2 typically follows. If not 1, and nothing applicable in 2, then we move to 3.
By Performance
Full and complete performance discharges their duites and the contract.
By Tender of Performance
Good faith tender of performance in accordance with terms will discharge duties. Barbi talks about present ability.
I always use the formulation: "ready, willing, and able to perform."
By Occurrence of a Condition Subsequent
Condition Subsequent
Condition (event) the occurrence or nonoccurrence of which cuts off an existing duty to perform.
Impossibility, Impracticability, Frustration of Purpose
An unanticipated or extraordinary event that makes duties impossible, impracticable to perform, or frustrates the purpose of the contract, where the nonoccurence of the event was a basic assumption at formation and neither party assumed the risk, the duties may be discharged.
By Impossibility
- Must be objective impossibility (no one could perform)
- Must have become impossible after formation
- Both parties duties are excused. Recision and restitution are available
- Partial impossibility only is discharged by that extent
Temporary Impossibility
Suspends, rather than discharges, duties. When performance is possible again the duty is due unless burden is substantially increased or is different than originally contracted.
Prior Partial Performance
Recovery in quasi-contract.
Types of Impossibility
- Death or Physical Incapacity
- Supervening Illegality
- Destruction of Subject Matter or Means
- contrast to contracts to build
- subject matter specificity
- source specificity
- unavailable when risk has passed to buyer
By Impracticability
A court may discharge a contract as being impracticable when the following elements are found: 1) performance would be extreme and unreasonable in difficulty or expense; and 2) its nonoccurence was a basic assumption of the parties.
UCC
Allows for impossibility and impracticability and will discharge the contract to the extent of those two issues.
- Allocation of risk
- Events sufficient for discharge
- Seller's partial inability to perform
Temporary impracticability: resume performance when no longer impracticable
Partial impracticability, discharge to the extent of unperformed duties.
By Frustration of Purpose
Courts may discharge duties when contract becomes valueless because of a supervening event that the party have no role in the event. Duties will be discharged even if they are possible. The following elements must be found: 1) there is a supervening event or act leading to frustration; 2) at the time of contracting it was not reasonably foreseeable, the purpose of the contract is destroyed by the event or act, the purpose of the contract was know by both parties at formation.
Barbi mentions the Coronation Cases.
see Krell v. Henry in your Calamari case book.
"Frustration of purpose differs from the defense of impossibility only in that the performance of the promise, rather than being impossible or impracticable, is instead pointless "Western Properties v. Southern Utah Aviation, Inc. 776 P.2d 656 (1989)
Distinguishing uses
Sellers generally raise Impossibility and Impracticability, where buyers generally raise Frustration of Purpose. As the Barbri says, "[p]aying money is never impracticable."
Part II
Discharges continued
By Rescission
A contract may be discharged by rescession.
- Mutual
- executory duties by both parties
- notes on unilateral contracts
- oral v. written and exceptions
- third party vesting
- Unilateral: there's a defense to formation
By Modification (partial discharge)
Modification discharges the terms of the original contract to the extent of the modified terms.
Requirements are those of modification:
- mutual assent (in some cases reformation)
- consideration (CL v. UCC)
By Novation
A contract will be discharged when there is a valid novation substituting a party. Novation requires 1) a valid existing contract; 2) agreement by all parties, including the new party to the novation; 3) immediate extinguishment of the existing contract; 4) a valid new contract.
By Substitute Contract
A contract may be discharged by a substitute contract. The revocation of the original contract may be express or implied and the court will look to intent of the parties.
By Accord and Satisfaction
A contract may be discharged by accord and satisfaction. An accord is where one party agrees to receives different performance than they believed was originally agreed. There is a consideration requirement, which is often satisfied if the consideration is of a different type or to be paid to a third party. If the accord is satisfied, then both agreements are discharged. If not, then the innocent party can choose between enforcing the accord or the original contract.
Accord and Satisfaction Notes
- revisit liquidated vs. disputed (unliquidated) debt
- breach by debtor vs. creditor
- checks tendered as payment in full
Misc
- by cancellation
- by release
- by account stated
- by lapse
- SOL
Breach Teaser
Common Law
- Material (Major) v. Minor Breach
UCC
- Perfect Tender Rule
- different remedies for buyer v. seller
Part III
Questions and Answers, then Cases.
Our cases this week
Krell v. Henry
Paradine v. Jane
CNA International Reinsurance Co., Ltd. v. Phoenix
Clark v. Wallace County Cooperative Equity Exchange
Eastern Air Lines, Inc. v. McDonnell Douglas Corp.
Transatlantic Financing Corp. v. United States
