Chapter 13: How Contracts Come to an End.

I. Contracts can be terminated in the following ways:

1. Performance: 
   • Time
     1. If time is not mentioned in a contract the court will consider completion in a reasonable time suitable.
     2. If time is essential to the contract, the courts would limit the amount of reasonable time. (contract for food..etc..)
     3. If a time limit is mentioned in a contract and time is not essential, the courts will still allow additional or reasonable time for completion.
     4. If a contract clearly states, “time is of the essence”, the time period stated will be enforced by the court.
   • Satisfaction
     1. The law requires that service be are performed in a satisfactory manner.
     2. If a dispute arises based on satisfaction of service, the court will use the reasonable person.
        • “Would the job be considered satisfactory by a reasonable person.”
        • *** The judge and jury would decide this IN COURT.***
     3. Contracts which state, “to the other parties satisfaction”, must perform to the satisfaction of the other party to be bound.
   • Substantial
     1. General Rule:
        • “In most instances if a contract is not fully completed or not to complete performance, the party suing will win.”
     2. Exception to the General Rule:
        1. The Doctrine of Substantial Performance states that if a contract is slightly less than complete and the major requirements of the contract have been fulfilled the party performing can recover agreed upon amount of contract. The performing party is responsible for the amount of the work not completed.
           • (The courts will not consider it unfair to deny payment do to minor incompleteness)
           • Examples: Construction Contracts
   • Tender
     • Terms of a contract can be fulfilled by “performing and paying”.
       1. Tender is an offer to do what has been agreed upon in a contract. This is called “making tender”.
          • For example: buying a computer-making tender would be..
            1. Offering money to pay.
            2. Offering computer at agreed time.
       2. Tender of performance:  fulfilling an act to a contract.
       3. Tender of payment: fulfilling payment to a contract.
          1. **If tender of performance is rejected- the party will be excused from fulfilling the contract.**
          2. **If tender of payment is rejected- the party is not excused from paying the debt.**
2. Agreement: *Contracts are created mutually and can be terminated mutually at any time of a contract.*
   • Mutual Release: Both parties to a contract mutually agree to end a contract, thus each party agrees to give up their consideration.
   • Accord and Satisfaction: One party ends contract due to unforeseen circumstances (money problems). The one party offers new consideration. The second parties acceptance is the accord and the carrying out of the promise is the satisfaction.
3. Impossibility of Performance: *Legally impossible to perform a contract.*
   • Death or illness
     • EXCEPTION: Can still exist if the original party assigns it to another party.
   • Destruction of Exact Subject Matter
   • Illegality
     • EXAMPLES: tobacco laws, drug laws, underage drinking deals.
4. Operation of Law: The Law protects the interest of society through legislation that enables contracts to be discharged.
   • Wrongful Attention: Any intentional, fraudulent alteration of a contract will terminate that contract under the law.
   • Statute of Limitations (need to copy)
   • Bankruptcy: The law protects people who are unable to pay debts for a period of time.
     1. Under the US Constitution, bankruptcy laws were passed to discharge contracts that could not be performed.