Download - Section 11.1
Performance and AgreementPerformance and AgreementSection 11.1Section 11.1
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Section 11.1Section 11.1Performance and Agreement Performance and Agreement
Section 11.2Section 11.2Impossibility of Performance Impossibility of Performance
and Operation of Law and Operation of Law
1111ChapterChapter How Contracts ComeHow Contracts Cometo an Endto an End
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
What You’ll Learn
How to identify when time is important in How to identify when time is important in a contract (p. 224)a contract (p. 224)
How to distinguish between satisfactory How to distinguish between satisfactory and substantial performance (p. 226)and substantial performance (p. 226)
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
What You’ll Learn
How to explain tender of How to explain tender of performance (p. 228)performance (p. 228)
How to explain how contracts can be How to explain how contracts can be discharged by agreement (p. 229) discharged by agreement (p. 229)
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Why It’s Important
Understanding when contracts come to an Understanding when contracts come to an end will help you determine your legal rights end will help you determine your legal rights and obligations in such situations.and obligations in such situations.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Legal Terms
discharged (p. 224)discharged (p. 224)performance (p. 224)performance (p. 224)complete performance (p. 224)complete performance (p. 224)reasonable time (p. 224)reasonable time (p. 224)substantial performance (p. 226)substantial performance (p. 226)
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Legal Terms
tender (p. 228)tender (p. 228)legal tender (p. 229)legal tender (p. 229)mutual release (p. 230)mutual release (p. 230)accord and satisfaction (p. 230)accord and satisfaction (p. 230)
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Ending a Contract
Discharge by Performance Time for PerformanceSatisfactory PerformanceSubstantial PerformanceTender of Performance
Section OutlineSection Outline
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Discharge by Agreement Mutual ReleaseAccord and Satisfaction
Section OutlineSection Outline
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Pre-Learning Question Pre-Learning Question
How does a contract come to an end?
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Ending a Contract Ending a Contract
When contracts eventually end, they When contracts eventually end, they are said to be are said to be dischargeddischarged..
Contracts can be discharged by Contracts can be discharged by performance and by agreement.performance and by agreement.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Pre-Learning Question Pre-Learning Question
What do you think “discharged by performance” means?
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Discharge by Performance Discharge by Performance
Most contracts are discharged by Most contracts are discharged by performanceperformance, meaning the parties , meaning the parties fulfill the terms of the contract by fulfill the terms of the contract by doing what they promised earlier.doing what they promised earlier.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Discharge by Performance Discharge by Performance
As long as all terms have been carried As long as all terms have been carried out properly and completely, the out properly and completely, the contract is discharged by contract is discharged by complete complete performanceperformance..
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Time for Performance Time for Performance
The time for completing a contract The time for completing a contract may be important to one or both of the may be important to one or both of the parties.parties.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Time for Performance Time for Performance
If the time is not stated in the contract If the time is not stated in the contract and there is a question of and there is a question of performance, the courts will say the performance, the courts will say the contract must be completed in a contract must be completed in a reasonable timereasonable time..
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Time for Performance Time for Performance
Reasonable time Reasonable time
Will vary with the circumstances.Will vary with the circumstances.Is defined as the time that is Is defined as the time that is suitable, fair, and proper to the suitable, fair, and proper to the objective in view.objective in view.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Time for Performance Time for Performance
A contract will specify that time is of A contract will specify that time is of the essence when it is a vital or the essence when it is a vital or essential element of the contract.essential element of the contract.
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
How are most contracts discharged?
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
ANSWERANSWER
By performance
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Satisfactory Performance Satisfactory Performance
When people perform services for When people perform services for others, the law requires that those others, the law requires that those services be done in a satisfactory services be done in a satisfactory manner.manner.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Satisfactory Performance Satisfactory Performance
Regardless of whether a contract Regardless of whether a contract specifically states the work be specifically states the work be performed “in a satisfactory manner,” performed “in a satisfactory manner,” if one party believes the job is if one party believes the job is unsatisfactory, the court uses the unsatisfactory, the court uses the reasonable person test.reasonable person test.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
11.111.1
Reasonable Person Test Reasonable Person Test
The court asks, “Would a reasonable person The court asks, “Would a reasonable person consider the job to be completed in a consider the job to be completed in a satisfactory manner?”satisfactory manner?”
I’m a reasonable person.
Has this job been completed in a
satisfactory manner?
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Reasonable Person Test Reasonable Person Test
The dispute will then be settled based The dispute will then be settled based on the answer to this question as on the answer to this question as determined by a judge or jury.determined by a judge or jury.
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Satisfactory Performance Satisfactory Performance
If one party agrees to perform If one party agrees to perform services for another “to the other’s services for another “to the other’s satisfaction,” then the other party must satisfaction,” then the other party must be satisfied to be bound to the be satisfied to be bound to the contract.contract.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Substantial Performance Substantial Performance
An exception to the rule of discharging An exception to the rule of discharging a contract by complete performance is a contract by complete performance is substantial performancesubstantial performance..
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Substantial Performance Substantial Performance
Substantial performance is slightly Substantial performance is slightly less than full performance.less than full performance.Someone who has fulfilled the Someone who has fulfilled the major requirements of a contract in major requirements of a contract in good faith, leaving only minor good faith, leaving only minor details incomplete, has substantially details incomplete, has substantially performed. performed.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Substantial Performance Substantial Performance
The courts will allow the person to The courts will allow the person to recover the amount agreed upon recover the amount agreed upon under the contract, minus the cost under the contract, minus the cost of completing the job.of completing the job.Substantial performance is often Substantial performance is often applied to construction contracts.applied to construction contracts.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Tender of Performance Tender of Performance
A A tendertender is an offer to do what you is an offer to do what you have agreed to do under a contract. have agreed to do under a contract.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Tender of Performance Tender of Performance
For example:For example:
If buying a car—offering to pay If buying a car—offering to pay money to the seller at the agreed money to the seller at the agreed timetimeIf selling a car—offering to give the If selling a car—offering to give the car to the buyer at the agreed time car to the buyer at the agreed time
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Tender of Performance Tender of Performance
If neither party has made tender, then If neither party has made tender, then neither party is in a position to bring neither party is in a position to bring suit against the other.suit against the other.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Tender of Performance Tender of Performance
The person offering to pay the The person offering to pay the required amount of money must required amount of money must offer offer legal tenderlegal tender—U.S. coins or —U.S. coins or currency.currency.Offering a check, even if it is Offering a check, even if it is certified, is not a valid tender of certified, is not a valid tender of payment.payment.
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Judy Anfinson agreed to create a garden landscape for Bill MacArthur “to his satisfaction” for $1,200.
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
When it was complete, Bill noticed Judy had planted some shrubs around the patio to which he was highly allergic. Is Judy required to replant the shrubs? Why or why not?
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
ANSWERANSWER
Yes. The contract requires Judy to complete the project to Bill’s satisfaction.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Pre-Learning Question Pre-Learning Question
What do you think “discharged by agreement” means?
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Discharge by Agreement Discharge by Agreement
Contracts are created by mutual Contracts are created by mutual agreement and may be terminated by agreement and may be terminated by mutual agreement.mutual agreement.
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Mutual Release Mutual Release
A A mutual releasemutual release is an agreement is an agreement between two parties to end an between two parties to end an agreement. By mutual agreement, the agreement. By mutual agreement, the contract no longer exists.contract no longer exists.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Accord and Satisfaction Accord and Satisfaction
A contract can also be discharged A contract can also be discharged when one party to an agreement when one party to an agreement agrees to accept performance from agrees to accept performance from the other party that is different from the other party that is different from what was agreed upon in the original what was agreed upon in the original contract.contract.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Accord and Satisfaction Accord and Satisfaction
In effect, one contract is substituted In effect, one contract is substituted for another, which is known as for another, which is known as accord accord and satisfactionand satisfaction. It is often used to . It is often used to settle an honest disagreement or settle an honest disagreement or unforeseen circumstances regarding unforeseen circumstances regarding an amount owed.an amount owed.
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Reviewing What You Learned
1. What is a reasonable time for completing a contract?
Section 11.1 Assessment
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Reviewing What You Learned
The time that is suitable, fair, and proper to the objective in view.
Section 11.1 Assessment
Answer
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Reviewing What You Learned
2. What is the difference between satisfactory and substantial performance of a contract?
Section 11.1 Assessment
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Reviewing What You Learned
The standard for satisfactory performance is reasonableness. Substantial performance is slightly less than full performance.
Section 11.1 Assessment
Answer
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Reviewing What You Learned
3. What is tender of performance?
Section 11.1 Assessment
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Reviewing What You Learned
An offer to do what a party has agreed to do under a contract.
Section 11.1 Assessment
Answer
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Reviewing What You Learned
4. How can contracts be discharged by agreement?
Section 11.1 Assessment
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Reviewing What You Learned
By mutual release and accord and satisfaction
Section 11.1 Assessment
Answer
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Section 11.1 Assessment
Critical Thinking ActivityDischarge by Agreement
Why does the court permit certain contracts to be discharged by accord and satisfaction?
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Section 11.1 Assessment
Critical Thinking Activity AnswerDischarge by Agreement It is used to settle an honest disagreement or unforeseen circumstances regarding an amount owed.
Understanding Business and Personal Law
Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Section 11.1 Assessment
Legal Skills in ActionAccord and Satisfaction Last week, your friend Cynthia used a credit card to purchase a snowboard for $277.89. This week she saw the same snowboard on sale for $250.43 at another store.
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Section 11.1 Assessment
Legal Skills in ActionAccord and Satisfaction Cynthia believes she can use accord and satisfaction to pay the lesser amount when her credit card comes in the mail.
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Section 11.1 Assessment
Legal Skills in ActionAccord and Satisfaction Send Cynthia an e-mail message explaining why accord and satisfaction will not work in this case.
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Performance and Agreement Performance and Agreement Section 11.1Section 11.1
How Contracts Come to an End
Section 11.1 Assessment
Legal Skills in Action AnswerAccord and Satisfaction Accord and satisfaction cannot be used because the lower price does not meet the criteria of unforeseen circumstances or disagreement about the amount that she originally bought the snowboard for.
Performance and AgreementPerformance and AgreementEnd of Section 11.1End of Section 11.1