Ending a Contract 6 1 Discharge by

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Ending a Contract 6. 1

Discharge by ______ • A series of activities that fulfill a contract • ______– may be stated in the contract or performed in a reasonable amount of time • ______ – May dispute a contract if work is not satisfactory; reasonable person test

Discharge by Performance • _____ – completed most major requirements, but has a few details unfinished; payment minus cost of completion is usually required • _____ – an offer to do what you have agreed to do under a contract; usually involves the payment of money

Discharge by Agreement • _________: Both parties agree to end a contract • __________: One party agrees to accept a different performance from the other party

______ Discharge • _________: – Impossibility of Performance – Operation of Law

Discharge by Impossibility of Performance • When ______ or illness prevents the performance of a personal service contract; the _____ of the means for performance; or a situation in which the contract become _____ • _________ – excuse for nonperformance; only if it requires a personal service • ____________ – Destruction through no fault of either party; destruction must occur after the contract is entered but before it is carried out

Discharge by Operation of Law • __________ – changing a contract without consent from both parties • __________ – the limit on how much time can pass before you bring legal action on a contract; Varies from state to state; For sale of goods it is typically 4 years – once the time is up, you cannot bring a lawsuit

Discharge by Operation of Law • ______________ – the debt may be renewed if the debtor makes a partial payment or admits the debt exists • _______ – Debt obligations still exist, but no jail time served

Assignment and Transfer of Rights • You can legally transfer contract rights as long as the contract does not _________________ • Terms – _____ – Party who transfers the rights – _____ – Party who receives the rights; this person is NOT a part of the original contract

Joe Bowl entered into a contract with Ima Fisher to fix the plumbing in her downstairs bathroom. Joe gave Ida an estimate of $650. Ima agreed and they signed a contract. Who entered into the contract? Joe owed $650 to Rusty Nailer for some construction work he did on the plumbing store. When Joe finished the work, he asked Ida to make her payment to Rusty instead of him so that he could clear his debt. Who was the assignor? The assignee? Ima was dissatisfied with the work that Joe did and refused to make a payment to Rusty sued Ima for lack of payment. Does Rusty have the right to sue Ima?

Delegation and Transfer of Duties • Delegation is the ___________ under a contract. • Do NOT confuse delegation and assignment – An assignment is a transfer of _____ – A delegation is a transfer of _____

_________ • Hand over the duty of doing the work to someone else • Performance may be ______, but responsibility may not. • You may not delegate duties if – The party agrees to perform the service ______ – The contract calls for the exercise of personal ______ and ______ – The contract ______ delegation • Example – Bob Builder contracts with Lisa Houser to build her dream home. Bob hires several subcontractors to perform plumbing and electrical work. Although different companies are sending workers to help build the house, Bob is ultimately responsible for overseeing the work that is done.

_______ • You ______need the permission of the other party to assign contract rights or delegate duties to a third person. • If you do receive permission and the other party agrees to deal with the assignee, the contract is called a novation, and the parties are replaced.

Third Parties • A contract is a ______ agreement that establishes a relationship between the parties to the contract. A person who is not a party to the contract but still benefits from the contract is called a third party _______. • Example – Grandma Jane enters into a contract with Carson Wheel to purchase a Ford F-150 to be given to her grandchild John as a graduation present. If Carson Wheel takes a down payment and then refuses to go through with the sale, John may sue Carson for specific performance of the contract as a third-party beneficiary.

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