Chapter 10CONTRACT PERFORMANCE, BREACH, AND REMEDIES I. VOLUNTARY CONSENTa. Parties must GENUINELY AGREE to a contract’s terms in order for the contract to be enforceableb. Voluntary consent negated by:i. Mistakes1. Mistake of material fact makes a contract voidable2. Unilateral mistake (by only one party) generally does NOT render a contract unenforceable3. Bilateral (mutual) mistake by both parties makes a contract voidable4. Mistakes of value: contract is normally enforceableii. Fraudulent Misrepresentation1. A misrepresentation of a material fact2. Intent to deceive3. Justifiable reliance on the misrepresentation by the innocent party4. Harm must occuriii. Undue Influence: negates the free will of one contracting partyiv. Duress: forcing someone to enter a contract via a wrongful or illegal actII. PERFORMANCE AND DISCHARGEa. Most contracts are discharged through performance (fulfilling the terms ofthe contractb. Conditions of Performance: performance may be contingent on the occurrence or nonoccurrence of a certain eventc. Discharge by Performancei. Complete Performance: when a party performs exactly as agreedii. Substantial Performance: performance of substantially all contractual terms can render a contract enforceable if:1. The party performed in good faith2. The performance mostly conforms to that which the contract promised3. Performance must create substantially the same benefits as those promised in the contract4. See: Jacob and Youngs v. Kent5. Damages measured by the cost to bring the object of the contract into compliance with its termsiii. Material Breach of Contract: the material nonperformance of a contractual duty1. Material breach: if performance is not at least substantial2. Minor breach: Not material, once breach has been cured, the nonbreaching party must resume performance of his/hercontractual obligationsiv. Anticipatory Repudiation: occurs when one party to the contract reuses to carry out his/her obligations before either party has a dutyto perform: treated as a material breachv. Time for performance: contract must be performed within a stated time, or, if no time is stated, a reasonable timed. The parties can agree to dischargei. Mutual rescission: parties agree to cancel contract and are returned to the positions they occupied before contract existed; to be effective, rescission also requires offer, acceptance and considerationii. Discharge by Novation: when both parties agree to substitute a third party for one of the original parties; novation requires:1. A previous valid obligation2. An agreement by all parties to a new contract3. The extinguishing of the old obligation4. A new contract that is validiii. Discharge by Settlement Agreement: a compromise that arises out of a genuine dispute over obligations under an existing contractiv. Discharge by Accord and Satisfaction: parties agree to accept performance that is different from the performance originally promisede. Discharge by Operation of Lawi. Material alteration of a written contract without consentii. Statute of Limitationsiii. Bankruptcyiv. Impossibility or impracticability of performancev. Frustration of purposeIII. DAMAGES FOR BREACH OF CONTRACTa. Types of Damages:i. Compensatory: covers direct losses and costsii. Consequential/Special: covers indirect and foreseeable lossesiii. Punitive: intended to punish and deter wrongdoingiv. Nominal: intended to recognize wrongdoing when no monetary loss is shownb. Mitigation: the injured party likely has a duty to mitigate (lessen) the damages owed himc. Liquidated Damages: specifies an amount of damages if contract is breached; usually enforceableIV. EQUITABLE REMEDIESa. Equitable remedies come into play when monetary damages are inappropriateb. Types of equitable remedies:i. Rescission and Restitution1. Rescission: an action to terminate the contract in order to return the parties to the positions they occupied prior to the transaction2. Restitution: the return of property, goods or funds in order to return the parties to the positions they occupied prior to the transaction3. Rescission and restitution work in concertii. Specific Performance: a judicial order to perform the act promised in the contract; will only be granted as a remedy if monetary damages will not suffice1. Contracts for the Sale of Land: every parcel of land is considered unique, so specific performance is a common remedy for a breach of contract for the sale of land2. Contracts for Personal Services: specific performance is an inappropriate remedyiii. Reformation: used if parties have imperfectly expressed their agreement in writing; allows a court to rewrite the contract to correctly reflect the parties’ intentions; appropriate in situations of:1. Fraud or mutual mistake2. An incorrect written statement of an oral agreement3. Covenants not to competeV. WAIVER OF BREACHa. A nonbreaching party may accept defective performance under a contract, thereby waiving their legal rights to seek redress for the breachi. Waiving party cannot later take legal action, as waiver effectively erases the past breachii. Waiver does not extend to subsequent, additional or future breaches of contract, except:1. Pattern of Conduct Exception: a waiver can extend to subsequent breaches if a reasonable person would concludethat similar defective performance in the future would also be acceptableVI. CONTRACTUAL LIMITATIONS ON DAMAGESa. A contractual provision attempting to limit or eliminate damages is unenforceable if it excludes liability for fraud, intentional injury, or acts contrary to public