BLAW Exam 3 Questions and Answers
Contractual Performance
Performance (doing what is promised) discharges or ends a party's contractual duties or obligations.
How may a party be discharged from a valid contract?
1. Full performance - both parties have completed their contractual obligatio...
Contractual Performance - answer Performance (doing what is promised) discharges
or ends a party's contractual duties or obligations.
How may a party be discharged from a valid contract? - answer 1. Full performance -
both parties have completed their contractual obligations and nothing else is left to be
done; contract has been fully executed.
2. A condition occurring or not occurring.
3. Material breach or anticipatory repudiation.
4. Operation of law.
5. Agreement of the parties.
Conditions of Performance - answer A condition is a possible future event that
triggers the:
1. Performance of a legal obligation.
2. Terminates an existing obligation under a contract.
(Clicker question) What happens if the condition is not satisfied? - answer The
contractual obligations are discharged. There is not a breach of contract.
Example: You go to the supermarket and fill up your cart upon realizing you left your
wallet at home. You leave the cart and discharge your obligation.
Conditions Precedent - answer An event that must occur or not occur before a party
is required to perform.
Example: Before going to college, you were required to graduate high school.
Conditions Concurrent - answer Each party must render performance
simultaneously.
Example: In obtaining a degree you have to go to class and do your work. Meanwhile,
the university is required to provide you these services.
,Conditions Subsequent - answer Occurrence or nonoccurrence of an event that ends
a party's obligation to perform.
Example (occurrence): Once you graduate, the university no longer has to provide you
with these services.
Example (nonoccurrence): Once at the university, you are unable to pay for tuition. This
ends the university's obligation.
Pack 2000, Inc. vs Cushman - answer Cushman agreed to transfer the leases of two
muffler shops to Pack 2000, Inc. and Pack 2000 had the option to buy the shops
eventually after certain conditions. Pack 2000 was required to pay rent each month to
Cushman, though Pack 2000 was often late on payments. Pack 2000 exercised the
option to buy the property but Cushman said that Pack was not in compliance so
Cushman denied the rights. Pack sued. Pack won. Cushman appealed and won the
reversal.
Example of Conditions of Performance
(Precedent) - answer DOW Chemical offers to sell a plant to DuPont. DuPont
accepts only if its engineers inspect the plant and certify it to be free of dioxin
contamination.
Example of Conditions of Performance
(Subsequent) - answer UPS hires Millie to drive a truck. Her employment contract
states that she must maintain her driver's license and not be convicted of a moving
violation to keep her job. Millie is convicted of drunk driving.
(Clicker question) Allegheny Power & Westmoreland Coal - answer Allegheny Power
contracts with Westmoreland Coal for the delivery of 17 tons to its electric plant.
Allegheny promises to pay when the coal is delivered. This is concurrent because both
parties have an obligation to perform. If Allegheny has the money, the coal is released.
If Allegheny doesn't have the money, coal is not released.
Snay vs. Gulliver Preparatory School - answer Snay filed an age discrimination
complaint when his contract wasn't renewed. Snay and the school came to agreement
that he would receive $80,000 as long as he did not discuss the case with anyone but
attorneys and advising professionals. Daughter posts on Facebook "Suck it, I'm going to
Europe thanks to Gulliver!" Court ruled in favor of Gulliver and Snay lost $80,000.
Discharge by Performance - answer The contract comes to an end when both
parties do what they have promised.
Types of Performances - answer 1. Complete or Full Performance
2. Substantial Performance (minor breach)
, 1. Complete or Full Performance - answer Performance is perfect.
2. Substantial Performance (minor breach) - answer Performance by a party that
deviates only slightly from complete performance
a. Good faith is required
b. What remedies does the non-breaching party have? Payed full contract price &
breaching party can give back to non-breaching party paying for repairs
c. Inferior performance: material breach occurs when a party renders inferior
performance of his or her contractual duties
- recover complete consideration
- accept inferior performance but recover damages
Anticipatory Breach of Contract - answer When one party tells the other that he or
she will not perform his or her contractual duties before the performance is due.
-treated as major breach
-responsibility of non-breaching party to mitigate damages
Clicker example: Penn State vs. Nittany Builders (Anticipatory) - answer Penn State
contracts Nittany Builders to construct a dorm for 600 students. Contractors use cheap
material and dorm can only support 300 students. Penn State can either:
1. Accept the building and pay contract minus the damages for defects
2. Rescind the contract, return to status quo, and remove the building (cost)
Discharge by Agreement - answer Parties can agree to discharge original contract or
create a new contract.
3 Types of Discharge by Agreement - answer 1. Discharge by Rescission -
cancellation of original contract
2. Discharge by Novation - substitution of one of the original parties
3. Discharge by Accord and Satisfaction - acceptance of performance different from
originally promised performance.
(Clicker Question) If a party has proven that a contract promise was breached, but the
non-breaching party has suffered no loss, does the non breaching party recover
compensatory damages? - answer No
Discharge by Operation of Law - answer Duties under contract are discharged by
law. 6 types:
1. Material Contract Alteration
2. Statute of Limitations
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