Bài giảng Business Law (13th edition) - Chapter 18: Performance & Remedies

ContractsIntroduction to ContractsThe Agreement: OfferThe Agreement: AcceptanceConsiderationReality of Consent3McGraw-Hill/Irwin Business Law, 13/e© 2007 The McGraw-Hill Companies, Inc. All rights reserved.ContractsCapacity to ContractIllegalityWritingRights of Third PartiesPerformance & Remedies3McGraw-Hill/Irwin Business Law, 13/e© 2007 The McGraw-Hill Companies, Inc. All rights reserved.Performance & RemediesPAETRHC18“It is an immutable law in business that words are words, explanations are explanations, promises are promises – but only performance is reality.”Harold S. Geneen, CEO of ITT, Managing (co-written with Alvin Moscow, 1984)Learning ObjectivesNature and types of conditions in contractsPerformance of contractsBreach of contractExcuses for non-performanceRemedies for breach of contract18 - *Entering into a contract shows intention to complete obligations under the contractGenerally, each party performs and is discharged (released) from further obligationIf a dispute arises over contract performance, remedies depend on contract terms and: Conditions, standard of performance expected, and excuses for non-performanceOverview18 - *Condition precedent is a future, uncertain event creating a duty to performCondition subsesequent is a future, uncertain event that discharges the duty to performCondition concurrent is when the contract calls for parties to perform at the same timeCondition excused by prevention, waiver, estoppel, and impossibilitySee Silvestri v. Optus SoftwareConditions in a Contract18 - *To determine whether a party is discharged, courts review the standard of performanceA strict performance standard requires full or perfect compliance with the contract termsA substantial performance standard is slightly lower standard applied to duties that are difficult to perform without some deviation from perfection in minor respectsPerformance of Contracts18 - *Breach of ContractEvery contract includes an obligation to perform in good faith and failure to perform is a breach of contract Non-breaching party may sue and recover for damages caused by the breachDetermining materiality (seriousness) is flexible and aids in determining remediesSee Arnhold v. Ocean Atlantic Woodland Corp. 18 - *Anticipatory breach occurs if a party indicates the party is unwilling or unable to perform Nonperformance of a duty may be excused in certain circumstances:Impossibility: “it cannot be done by anyone”Impracticability: when unforeseen developments make performance highly impracticable, unreasonably expensive, or of little value to promisee (UCC 2–615)Anticipatory Breach & Excuses18 - *Legal remedies (money damages)Compensatory damages, nominal damages, liquidated (contractual) damages, and in certain circumstances, punitive damagesEquitable remediesSpecific performance or injunctionRestitutionRemedies for Breach of Contract18 - *Test Your KnowledgeTrue=A, False = BWhen a condition precedent occurs, the contract arises, creating duties to performJohn agrees to work as Katy’s realtor until he sells her house. Katy closed on her house sale yesterday, so the contract has been discharged.The standard for materiality of a breach is when 50% of a contract has been performed18 - *Test Your KnowledgeTrue=A, False = BLegal remedies for breach of contract include specific performance or injunctionNonperformance of a duty is always a breach of contractPerformance that falls short of complete performance in some minor respect, but does not deprive the other party of a material part of the consideration for which s/he bargained is known as substantial performance.18 - *Test Your KnowledgeMultiple ChoiceSteve promised to work for his employer on Saturday morning. Steve didn’t show up for work on Saturday because he decided he didn’t need the overtime money. Steve: (a) Is excused due to impracticality(b) Breached his contract (c) Breached the implied covenant of good faith (d) Both B and C(e) None of the above18 - *Test Your KnowledgeMultiple ChoiceRobert contracted to paint Stan’s house by the end of June, but realized after signing the contract that he had too many jobs to do and could not finish by the end of June. Robert called Stan and told him he could not fulfill the contract. Robert: (a) Is excused due to impossibility(b) Engaged in anticipatory breach(c) Is excused because of condition precedent(e) None of the above18 - *Thought QuestionsShould a non-breaching party always file suit against a breaching party?What are the ethical issues involved in a breach of contract? 18 - *