Chapter 17 Discharge of Contracts LEB 320F 1st Edition Exam 3 Study Guide Lectures 17 26 Discharge is when contractual obligations come to an end and this means that the duties of the contracting parties have been discharged There are many ways or a persons contractual obligations can be discharged the most important are o 1 Operation of Conditions Conditions generally Once a contract is formed each party is said to have incurred a duty of immediate performance Condition can be defined as an express or implied provision in a contract which upon the occurrence or nonoccurrence of a specified event either creates suspends or terminates the rights and duties of the contracting parties o The law recognizes three kinds of conditions conditions precedent conditions subsequent and conditions concurrent and each type of condition can be furthered classified as express or implied Conditions precedent A condition precedent is a clause in a contract which indicates that the promises made therein are not to be operative until a specified event occurs The act of rezoning therefore is a condition precedent and since the condition resulted from the language of the contract rather than by implication the rezoning constitutes an express condition precedent Conditions precedent can usually be identified by clauses containing the words if in the event of or when When a contract clearly creates a condition precedent no duty of immediate performance arises until the specified event occurs Conditions subsequent Occasionally both parties to contract are willing to incur a duty of immediate performance but want to be freed of their obligations if a particular circumstance arises before the performance date This can be achieved by conditions subsequent a clause in a contract providing that upon the happening of a specified event the contract shall be inoperative or void The essential difference in legal effect between the two basic kinds of conditions is that the occurrence of a condition precedent imposes a duty of immediate performance while the occurrence of a condition subsequent removes such a duty Conditions concurrent Conditions concurrent exist when a contract expressly provides that the performances of the parties are to occur at the same time An example of this is a land sale contract which provides that the seller is to deliver the deed on payment of the purchase price o 2 Performance Most contracts are discharge by performance by each party completely fulfilling his or her promises The subject of performance merits special attention for several reasons 1st many cases arise in which the actual performance of a promisor is to some extent defective It falls short of what was promised or it deviates from the terms of the contract in only minor respects 2nd in some cases the courts must determine whether the defective performance constituted a breach of a condition or a mere breach of a promise Breach of condition usually frees the non defaulting party while a breach of a promise generally does not unless it is a material one Promises degree of performance required Many agreements consist simply of the exchange of mutual promises with neither party s obligations expressly conditioned in any way In most of these contracts however it is usually apparent from their nature that one of the parties is to perform his or her part of the bargain before the other is obligated to do so When a promisor seeks to recover the contract price that person must show that he or she has fully performed the promise in some cases or substantially performed it in others Total performance Promises that can only be discharged only by complete performance A contract under which a seller of land is obligated to convey merchantable title falls into the same category delivery of the deed conveying any interest or title less than that specified will not discharge the sellers obligation Substantial performance o Many obligations are of such a nature that it is unlikely that a 100 percent performance will actually occur The typical example involves a construction contract under which a builder agrees to build a home according to detailed plans and specifications In contracts of this sort If the promise owner seeks to escape liability on the ground of nonperformance of the promisor builder it is ordinarily held that the promisor has sufficiently fulfilled the obligation if his or her performance though imperfect conformed to the terms of the contract in all major respects The rule is known as the doctrine of substantial performance For the doc of substantial performance two requirements must be met 1 Performance must be substantial and 2 The omissions or deviations must not have been occasioned by bad faith on the part of the builder o Substantial performance Amount of recovery The rule of substantial performance is applicable to a particular case the promisor plaintiff is entitled to recover the contract price minus damages Special Problems relating to performance Personal satisfaction contracts o Under the ordinary contract a person who has undertaken the performance of a hob impliedly warrants only that he or she will perform in a workmanlike manner If the performance meets this standard he or she is entitled to recover the contract price even if the person for whim the work was done is not satisfied with it o In determining whether the condition had been met the courts distinguish between two kinds if contracts 1 Those in which matters of personal taste esthetics or comfort are dominant considerations and The condition must be fulfilled only if the promise is actually satisfied with the performance that was rendered no mattered how peculiar or unreasonable that persons taste may be 2 Those that entail work of mere mechanical utility Objective test is used Performance by an agreed time o If a contract does not provide a time by which performance is to be completed the general rule is that each party has a reasonable time within which to perform his or her obligations o A troublesome situation is presented by contracts that do contain a stated time of performance The general rule in such a provision of and by itself does not create a condition precedent Under this view it is sufficient if the performance occurs within a reasonable time after the date specified o Time of the Essence Clauses Performance by the agreed upon time does constitute a condition precedent the intention can be manifested in two ways 1 by the express