Chapter 17 Business Law

Front 1

Definition of a Condition

Back 1

an event whose happening or nonhappening affects a duty of performance

Front 2

Express Condition

Back 2

contingency explicitly set forth in language

Front 3

• Satisfaction express condition

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making performance contingent on one party’s approval of the other’s performance

Front 4

Subjective Satisfaction

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approval based on a party’s honestly held opinion

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Objective Satisfaction

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approval based on whether a reasonable person would be satisfied

Front 6

• Implied-in-Fact Condition

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contingency understood by the parties to be part of the agreement, though not expressed

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• Implied-in-Law Condition

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contingency not contained in the language of the contract but imposed by law; also called a constructive condition

Front 8

Concurrent Conditions

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conditions that are to take place at the same time

Front 9

Condition Precedent

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an event that must or must not occur before performance is due

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Condition Subsequent

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an event that terminates a duty of performance

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DISCHARGE BY PERFORMANCE

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Discharge termination of a contractual duty
Performance fulfillment of a contractual obligation resulting in a discharge

Front 12

DISCHARGE BY BREACH

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Definition of Breach a wrongful failure to perform the terms of a contract that gives rise to a right to damages by the injured party

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Material Breach

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nonperformance that significantly impairs the injured party’s rights under the contract and discharges the injured party from any further duty under the contract

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• Prevention of Performance

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one party’s substantial interference with or prevention of performance by the other constitutes a material breach and discharges the other party to the contract

Front 15

Perfect Tender Rule

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standard under the UCC that a seller’s performance under a sales contract must strictly comply with contractual duties and that any deviation discharges the injured party

Front 16

Substantial Performance

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performance that is incomplete but that does not defeat the purpose of the contract; does not discharge the injured party but entitles him to damages

Front 17

Anticipatory Repudiation

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an inability or refusal to perform, before performance is due, that is treated as a breach, allowing the nonrepudiating party to bring suit immediately

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Material Alteration of Written Contract

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a material and fraudulent alteration of a written contract by a party to the contract discharges the entire contract

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Mutual Rescission

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an agreement between the parties to terminate their respective duties under the contract

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Substituted Contract

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a new contract accepted by both parties in satisfaction of the parties’ duties under the original contract

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Accord and Satisfaction

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substituted duty under a contract (accord) and the discharge of the prior contractual obligation by performance of the new duty (satisfaction)

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Novation

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a substituted contract involving a new third-party promisor or promisee

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Subjective Impossibility

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Impossibility the promisor—but not all promisors—cannot perform; does not discharge the promisor

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Objective Impossibility

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no promisor is able to perform; generally discharges the promisor

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Subsequent Illegality

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if performance becomes illegal or impractical as a result of a change in the law, the duty of performance is discharged

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Frustration of Purpose

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principal purpose of a contract cannot be fulfilled because of a subsequent event

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Commercial Impracticability

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where performance can be accomplished only under unforeseen and unjust hardship, the contract is discharged under the Code and the Restatement

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Bankruptcy discharge available

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to a debtor who obtains an order of discharge by the bankruptcy court

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Statute of Limitations after the statute of limitations has run, the debt

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is not discharged, but the creditor cannot maintain an action against the debtor