BUS-233: Exam 4

• What is it called when something that was supposed to be done as stated in a contract is not done?

  a breach
• If a valid and enforceable contract exists, obligations pursuant to the terms of the contract must be...


  discharged.
• conditions precedent


  things that have to happen before a contract is performed
• conditions subsequent


  things that may happen between the time a contract was entered and the time to perform, which may create an issue in performance
• Most contracts are discharged by...

  tender of performance (being ready, willing, and able to perform when the contract says to perform).
• If there is a time noted in a contract, when should an action be done?

  within that time
• If a contract does not call for a specific time, when may the action be done?

  in a time reasonable under specific circumstances
• time of the essence


  whatever dates are in the contract must be followed or else the contract will be considered breached
• When the price of the subject matter to a contract is time sensitive to the price, the time stated in a contract is...

  strict.
• substantially performed


  a contractual obligation was started but not completed
• What is the remedy of a breached contract?

  taking steps to mitigate damages
• What is typically the cost of mitigating damages?

  the contract price less whatever is the cost for the nonbreaching party to have the job completed
• Counterclaims can be made for...

  substantial performance.
• consequential damages


  damages the plaintiff tries to recover as a direct result of the breach of a contract
• liquidated damages


  damages in situations where the parties are reasonably sophisticated, the parties are represented by counsel, and it would otherwise be difficult to calculate the damages
• perfect tender rule


  requirement that the seller deliver the goods in conformity with the contract, down to the last detail
• If a job is partially completed but cannot be finished, there is still a possibility of...

  payment because courts do not like unjust enrichment.
• Federal Consumer Protection Act


  the act that states there is a three-day right of rescission (three days to return items) on bigger purchases
• Parties can agree to discharge obligations through...

  mutual rescission (rescinding the contract)
• What must be looked at when a new agreement is introduced into a situation?

  the intent of the parties
• accord and satisfaction


  an arrangement between contracting parties whereby one of the parties substitutes a different performance for their original duty under the contract
• In the event an accord is not followed, what can be used as a defense?

  satisfaction
• A contract may not go forward if there is:

  > destruction of the subject matter of the contract

  > a change in the law

  > death or disability of one or both of the parties but only if they are a specified party to the contract
• commercial impracticability


  an exception that discharges an obligation in a contract that is impracticable and cannot be accomplished
• frustration of purpose


  an exception that discharges an obligation when an unforeseen event undermines the principal purpose of a party for entering into a contract
• temporary impossibility


  an exception that suspends an obligation in the event something happens to the individual supposed to perform the obligation
• statute of limitations


  the statute that states the one only has so long to sue somebody
• Contracts have a statute of limitations of...

  six years.
• Negligent torts have a stature of limitations of...

  two years.
• Intentional torts have a statute of limitations of...

  one year.
• statute of frauds


  the statute that states if a contract involves the sale of land, is a contract to be an executor, is in anticipation of marriage, involves subject matter with a value over $500, involves suretyship, cannot be performed within one year, or stands for the debt of another, it has to be in writing
• anticipatory repudiation


  words or actions by one party that indicates an intention not to perform or follow the provisions of a contract required to be performed in the future
• Legal discharges:

  > Statute of limitations

  > Bankruptcy

  > Statute of frauds

  > Lack of consideration

  > Illegality

  > Incapacity

  > Duress

  > Impossibility

  > Anticipatory repudiation
• laches


  occur in a situation in which somebody is within their right to bring an action but unreasonably delayed asserting the claim to the detriment of the opposing party
• unclean hands


  occur in a situation in which two wrongs do not make a right
• Equitable discharges:

  > Unconscionability

  > Laches

  > Unclean hands
• Legal remedies (monetary damages):

  (1) Compensatory damages

  (2) Punitive damages

  (3) Consequential damages

  (4) Liquidated damages
• Equitable remedies:

  (1) Rescission and restitution

  (2) Specific performance

  (3) Injunction

  (4) Reformation

  (5) Recovery based on quasi-contract
• One way a contract can be rescinded is if it is determined to be...

  voidable by the court.
• specific performance


  a type of relief that is only available if the subject matter of the contract is unique, monetary damages will not be sufficient, and the item has some substantial value