MNGMT 3540 1nd Edition Lecture 15 Outline of Last Lecture I Introduction II Mutual Mistake of Fact Bilateral III Misrepresentation IV Elements of Fraud in the Inducement V Duress VI Undue Influence VII Unconscionability Contracts which are grossly unfair Outline of Current Lecture VIII Complete Performance IX Material Breach X Occurrence or Failure of Condition XI Agreement of Parties XII Discharge by Operation of Law XIII Compliance with Court Ordered Remedy Current Lecture Six ways Duty of Performance is Discharged canceled I Complete Performance A Reasonable Expectation test These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute i The performing party under a service contract is released due to complete performance when he meets the reasonable expectations of the other party in light of the entire contract II Material Breach A Material vs Immaterial i A material breach is one which is important in light of the entire contract ii Immaterial breach unimportant in light of the entire contract breaching party still has substantially performed and may sue on the contract B Substantial Performance i Performance where there is an immaterial breach ii Substantial performance is a partial discharge of the performing partythe performing party may still collect on the contract but the other party is entitled to reduction of payment because of the immaterial breach C Consequences of Material Breach i The non breaching party s duty of performance is discharged D Three things affecting materiality of breach i A satisfactory clause can make an immaterial breach material 1 If the contract is a matter of taste then complete satisfaction is required 2 If the contract is a matter of function then reasonable satisfaction is required ii A time is of the essence clause can make an immaterial breach material 1 Generally a reasonable time delay is immaterial breach or no breach at all 2 A time is of the essence clause stating those exact words converts an immaterial time delay into a material breach iii An anticipatory repudiation is considered a material breach 1 One party informs the other that he will not perform the contract prior to the time contract is due 2 Considered a material breach even though there would have been performance III Occurrence or Failure of Condition A Condition Precedent i Event must happen before a contractual duty arises ii Examples Collision claim bonus incentive B Condition Subsequent i Contractual duty is relieved after an event ii Example notification of drought C Concurrent Condition i Each party s duty conditioned on the other s simultaneous performance ii Example cash on delivery IV Agreement of Parties A Voluntary Rescission i An agreement by the parties to conceal the contract B Novation i An agreement by the parties to cancel the old contract and enter a new contract C Accord and Satisfaction i An agreement accord by one party to accept performance which is different from the required by the contract followed by the completion satisfaction of that performance by the other party D Waiver i A voluntary acceptance of inadequate performance or a pattern of conduct which implies a waiver of breach of contract V Discharge by Operation of Law A Bankruptcy i Bankruptcy cancels discharges most debts of the bankruptcy debtor ii Exceptions student loans child support B Statute of Limitations i When the time period set by statute for filing a type of lawsuit expires the breaching party s obligation is cancelled discharged ii Contract becomes unenforceable C Alteration i Intentional material alteration by one party discharges the other D Four types of impossibility i Death or incapacity of an essential party ii Destruction of the subject matter of contract for example by fire iii Intervening Illegality the agreement becomes illegal between the time it is and the time performance is complete iv Unforeseeable Change 1 Commercial Frustration common law a drastic unforeseeable change in the circumstances makes performance impossible 2 Commercial Impracticability UCC Sales a An event occurred which parties assumed would not occur as basic part of contract and b The event has an extreme effect on performance VI Compliance with Court Ordered Remedy A Breach of contract suit followed by judgment and payment