Glossary of Management 3540 Chapter 16 business law
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- Reasonable expectations test
- The performing party is released due to complete performance when he meets the reasonable expectation of the other party in light of the entire contract
- Substantial performance
- The performing party may still collect on the contract, but the other party is entitled to a reduction of payment because of the immaterial breach
- Material breach
- A breach important in light of the entire contract
- Immaterial breach
- A breach that is unimportant in light of the entire contract
- Consequences of a material breach
- The non breaching party's performance is discharged
- Three things affecting materiality of breach
- 1. Satisfaction clause
2. "Time is of the essence" clause
3. Anticipatory repudiation
- Satification Clause
- If contract is a matter of taste, then complete personal satisfaction is required.
If contract is a matter of function, only reasonable satisfaction is required
- "Time is of the essence" clause
- Converts an immaterial time delay into a material breach
- Anticipatory Repudiation
- One party tells the other they will not perform the contract prior to the time performance is due.
A material breach, even though there is time remaining for performance.
- Condition precedent
- Event must happen before a contractual duty arises.
Ex- collision claim, bonus incentive
- Condition Subsequent
- Contractual duty is relieved after an event
Ex- Drought notification
- Concurrent condition
- Each party's duty conditioned on the other's simultaneous performance
- Voluntary recission
- An agreement by the paries to cancel the contract
- an agreement by the parties to cancel the old contract and enter a new one.
- Accord and satisfaction
- An agreement (accord) by one party to accept a performance which is different from that required by contract, followed by the completion (satisfaction) of that performance by the other party.
- A voluntary acceptance of inadequate performance, or a pattern of conduct which implies a waiver of breach of contract.
- Bankruptcy cancels most debts of the bankruptcy debtor
exceptions- student loans, child support and taxes
- Statute of limitations
- When the time period set by statute for filing a type of lawsuit expires, the breaching party's obligation is cancelled
Contract becomes unenforceable
- Intentional material alteration by one party discharges the other
- a.) Death or incapacity of an essential party
b.)Destruction of subject matter of contract
c.) Intervening illegality- the agreement becomes illegal between the time it is entered and the time the performance is complete
d.) Commercial frustration (common law)- A drastic unforseeable change in the circumstances that makes performance impossible
- Commercial impracticability
An event occurred which parties assumed wouldnt occur as basic part of contract
Event has extreme effect on performance
- Compliance with court ordered remedy.
- Breach of contract suit followed by judgement and payment
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