MNGMT 3540 1nd Edition Lecture 15 Outline of Last Lecture I. IntroductionII. Mutual Mistake of Fact (Bilateral)III. MisrepresentationIV. Elements of Fraud in the InducementV. DuressVI. Undue InfluenceVII. Unconscionability—Contracts which are grossly unfairOutline of Current Lecture VIII. Complete PerformanceIX. Material BreachX. Occurrence or Failure of ConditionXI. Agreement of PartiesXII. Discharge by Operation of LawXIII. Compliance with Court Ordered RemedyCurrent LectureSix ways Duty of Performance is Discharged (canceled):I. Complete PerformanceA. Reasonable Expectation testThese 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 contractII. Material BreachA. Material vs. Immateriali. A material breach is one which is important in light of the entire contractii. Immaterial breach: unimportant in light of the entire contract-breaching party still has substantially performed and may sue on the contractB. Substantial Performancei. Performance where there is an immaterial breachii. Substantial performance is a partial discharge of the performing party- the performing party may still collect on the contract, but the other party is entitled to reduction of payment because of the immaterial breachC. Consequences of Material Breachi. The non-breaching party’s duty of performance is dischargedD. Three things affecting materiality of breachi. A satisfactory clause can make an immaterial breach material1. If the contract is a matter of taste, then complete satisfaction is required2. If the contract is a matter of function, then reasonable satisfactionis requiredii. A time is of the essence clause can make an immaterial breach material1. Generally a reasonable time delay is immaterial breach or no breach at all2. A “time is of the essence” clause stating those exact words, converts an immaterial time delay into a material breachiii. An anticipatory repudiation is considered a material breach1. One party informs the other that he will not perform the contract,prior to the time contract is due2. Considered a material breach, even though there would have been performanceIII. Occurrence or Failure of ConditionA. Condition Precedenti. Event must happen before a contractual duty arisesii. Examples: Collision claim, bonus incentiveB. Condition Subsequenti. Contractual duty is relieved after an eventii. Example: notification of droughtC. Concurrent Conditioni. Each party’s duty conditioned on the other’s simultaneous performanceii. Example: cash on deliveryIV. Agreement of PartiesA. Voluntary Rescissioni. An agreement by the parties to conceal the contractB. Novationi. An agreement by the parties to cancel the old contract and enter a new contractC. Accord and Satisfactioni. 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 partyD. Waiveri. A voluntary acceptance of inadequate performance, or a pattern of conduct which implies a waiver of breach of contractV. Discharge by Operation of LawA. Bankruptcyi. Bankruptcy cancels (discharges) most debts of the bankruptcy debtorii. Exceptions: student loans, child supportB. Statute of Limitationsi. When the time period set by statute for filing a type of lawsuit expires thebreaching party’s obligation is cancelled (discharged).ii. Contract becomes unenforceableC. Alterationi. Intentional material alteration by one party discharges the otherD. Four types of impossibilityi. Death or incapacity of an essential partyii. Destruction of the subject matter of contract- for example by fireiii. Intervening Illegality- the agreement becomes illegal between the time it is and the time performance is completeiv. Unforeseeable Change1. Commercial Frustration (common law)- a drastic unforeseeable change in the circumstances makes performance impossible2. 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 RemedyA. Breach of contract suit followed by judgment and