Business Law Chapter 18 Flashcards

Questions and Answers

What is the definition of a condition in a contract?

Stipulation or prerequisite in a contract, will, or other instrument (correct)

A clause that outlines penalties for breach

A statement of work to be performed

A type of legal dispute resolution

What is a condition precedent?

A condition that must occur before a party to a contract has an obligation to perform under the contract.

What does a condition subsequent refer to?

An event whose occurrence or lack thereof terminates a contract.

Define concurrent condition.

A condition that is mutually dependent on another, where parties to a contract agree to exchange performances simultaneously. Signup and view all the answers

What is meant by the term 'tender' in a contract?

An offer to perform. Signup and view all the answers

How are most contracts discharged?

By performance. Signup and view all the answers

What is the implication of 'time of performance' in a contract?

Performance must be done within the specified or reasonable time. Signup and view all the answers

What happens when no time is specified in a contract?

It is implied that performance must be done at a reasonable time. Signup and view all the answers

What does the waiver of essence of time limitation refer to?

A provision that allows time requirements to be waived under certain conditions. Signup and view all the answers

What occurs when time is essential in a contract?

Failure to perform within the specified time constitutes a breach of contract. Signup and view all the answers

What is the meaning of 'substantial performance'?

A party who performs in good faith is entitled to payment, offset by any defect or damages. Signup and view all the answers

What does the fault of the complaining party entail?

A party cannot complain about defective performance if it follows the contract terms required by them. Signup and view all the answers

What is rescission in contract law?

The action of one party to set aside the contract due to the other party's breach. Signup and view all the answers

Which of the following can discharge a contract?

All of the above Signup and view all the answers

What constitutes discharge by impossibility?

When an unexpected occurrence makes performance impossible. Signup and view all the answers

What happens if a specific subject matter of a contract is destroyed?

The contract is discharged if the destruction occurs through no fault of either party. Signup and view all the answers

What does the term 'commercial impracticability' refer to?

When performance becomes excessively burdensome due to unforeseen circumstances. Signup and view all the answers

What is the statute of limitations?

A law that determines how long a person can wait before bringing a lawsuit. Signup and view all the answers

What is a release in contract law?

An instrument that relinquishes claims against one or more parties. Signup and view all the answers

What provides the definition for force majeure?

An unavoidable accident. Signup and view all the answers

Study Notes

Discharge of Contracts Terms and Definitions

Condition: Stipulation in a contract classified into conditions precedent, subsequent, and concurrent.
Condition Precedent: An obligation triggered by an event that must occur before a party's performance is required (e.g., marriage requirement before boat ownership).
Condition Subsequent: An event that, if it occurs, terminates an existing contract (e.g., failing a drug test ends employment).
Concurrent Condition: Mutual dependencies where both parties perform simultaneously (e.g., payment upon delivery).
Tender: An actual offer to perform, particularly in making a payment.
Normal Discharge of Contract: Most contracts are concluded through performance.

Payment and Time Considerations

Payment as Performance: Specific application of payments by the debtor is obligatory, especially if designated by the creditor.
Time of Performance: Obligations should be completed within a specified timeframe outlined in the contract.
No Time Specified: Implies performance must occur within a reasonable timeframe based on circumstances.
Waiver of Essence of Time Limitation: A time provision can be waived if a party requests performance after the deadline.
When Time is Essential: A clearly defined timeframe for performance creates a breach if not met, allowing for claims of damages.
Adequacy of Performance: Substantial performance allows for compensation minus any defects; perfection isn't required.

Discharges and Rescissions

Discharge by Unilateral Action: Certain contracts allow one party to cancel unilaterally through a notice.
Rescission: A party may nullify a contract upon breach by the other party.
Consumer Protection Rescission: Provides consumers a chance to reconsider transactions, often allowing for rescission within a few days.
Discharge of Agreement: Contracts can be ended through mutual agreement, new contracts, or specific original provisions.

Issues Causing Discharge

Destruction of Particular Subject Matter: Contracts referencing specific items are terminated if those items are destroyed through no fault of either party.
Commercial Impracticability: Performance becomes excessively burdensome due to unforeseen events may be a valid defense.
Frustration of Purpose Doctrine: If the fundamental purpose of a contract is thwarted unexpectedly, parties may be excused from performance.
Temporary Impossibility: Conditional suspension of performance due to temporary obstacles; performance must not cause an undue burden later.
Bankruptcy: Legal process allowing debtors to relinquish assets for creditor distribution, leading to discharge from most debts.
Statute of Limitations: Each state has varying time limits for initiating lawsuits; missing these can bar claims permanently.

Others

Release: An arrangement relinquishing claims or potential claims against liable parties.
Waiver: Giving up a known right or objection.
Force Majeure: Legal doctrine excusing performance due to unforeseen events beyond control (e.g., natural disasters).
Act of the Other Party: Discharge may occur if one party's interference prevents performance of the contract.

Overall, understanding these contract discharge terms is crucial for navigating legal obligations and rights effectively.

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Description

Explore key concepts of discharge of contracts in Business Law with these flashcards. Learn important definitions and classifications, including conditions precedent and conditions subsequent. This quiz will help reinforce your understanding of contract stipulations essential for any legal professional.