Ehsan Kabir | Impossibility of Performance in a Contract

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Impossibility of Performance in a Contract

• Ehsan Kabir

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Carrying out the Contract

• We know that once the 5 essential elements are in
  place and the parties have agreed, a binding
  contract exists.
• But how to do contracts come to an end?

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Discharging a Contract

• Once a contract exists, each party has rights
  and responsibilities. When each side has carried
  out those responsibilities and the contract is
  carried out as planned, the contract is
  discharged.

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3 Ways to Discharge a Contract

• Performance
• Mutual Agreement
• Impossibility of Performance

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Performance

• Fulfilling the obligations of your contract.
• Most common way to discharge a contract.
• Example
• A painting company completes their job and you
  pay them the agreed upon amount.

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Mutual Agreement

• All parties of a contract agree to cancel it.
• Might cancel one contract by agreeing on a new
  contract.
• Example
• You are selling your car and already have a
  contract. But then you remember that you have
  winter tires and agree to add that in.

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Impossibility of Performance

• Parties of a contract are excused from performing
  because of events that make it impossible have
  occurred after the agreement had been made.
• Example
• An outdoor concert is cancelled because of a
  rainstorm.

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Breach of Contract

• Opposite of specific performance.
• Occurs when one party doesnt finish its
  obligations.
• Breach of condition-important part of the
  contract is breached.
• Breach of warranty-a small part of the contract
  is breached.

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Substantial Performance

• Protects the other side (the person who was
  breached is protected but the law looks at both
  sides)
• Rule of substantial performance protects a party
  who has fulfilled most of the contracts but not
  all of the contract.

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Remedies for Breach of Contract

• Damages
• Specific Performance
• Injunctions
• Rescission

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Damages

• Damages are awarded to compensate the injured
  party for any losses.
• The intention is not to punish the party that
  breached the contract but to place the injured
  party in the same position as if the contract had
  been completed.

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Damages continued

• Mitigation of Loss
• The courts expect that a person who is injured by
  a breach of contract to take reasonable steps
  to reduce or prevent any losses that may occur.
• Liquidated Damages
• Many contracts include liquidated damages. This
  is the sum of money that the parties agree to in
  advance to settle any breach of contract that
  might occur.

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Specific Performance

• For a breach of contract, usually damages () is
  enough, but what if it isnt?
• Specific performance
• The precise terms of the original contract must
  be honoured.
• likely be awarded if the breach involves a one
  of a kind item
• but is not available if the courts would have
  to supervise the carrying out of the order

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Injunctions

• Opposite of specific performance.
• It requires the defendant not to do something.
• Example
• Non-competition clause- stops trade or employment
  to limit competition
• reasonable

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Rescisson

• Rescission returns the parties to their original
  positions before the contract was formed.

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Privity of Contract

• In order for an injured party to win a breach of
  contract, they have to prove privity of contract.
  
• They have to prove that they had a contractual
  relationship with the defendant.

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Limitations of Actions

• Injured party has the right to take court action
  after they have had a breach of contract.
• However, the Statute of Limitations states that
  there are some time limits.
• If you dont do anything within that time, the
  court will no longer help you enforce it.

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Sale of Goods Legislation
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Sale of Goods Act

• 1st legislation to regulate the sale of goods was
  the 1893 Sale of Goods Act passed by the British
  Parliament. .
• Very specific area of contract law that deals
  with how sellers transfer the ownership of goods
  (present or future) to the buyer for monetary
  consideration.

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Sales of Goods Act continued

• Barter transactions do not use money so its not
  covered by this act.
• Goods only refers to personal property, such
  as furniture, clothing, appliances and other
  movable possessions.

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Title, Delivery and Payment

• Title
• The owner of goods has title of the goods.
• Most written contracts state when title passes to
  the buyer.
• This matters because the owner ends up with the
  loss if the goods are lost, stolen, damaged or
  destroyed.

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Title, Delivery and Payment continued

• Delivery
• Is the transfer of ownership from seller to
  buyer usually takes place at the sellers place
  of business.

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Title, Delivery and Payment continued

• Payment
• Most contracts state the time and method of
  payment. Sale of Goods legislation states that
  payment should be made at the time of delivery.

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Express Conditions Express Warranties

• Express condition
• Clearly outlined in the contract and is an
  important part of the contract.
• Express warranties (guarantees)
• Specific promises that manufacturers/retailers
  make to consumers about their products/services
• Performance
• Quality
• Condition

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Express Conditions Express Warranties continued

• When a contract has an express warranties
  (guarantees) any verbal promises the seller makes
  will not be binding
• Exception If a buyer makes a purchase based only
  on the advice/information of the seller, those
  verbal promises can be binding.

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Secret Warranties

• Specific promise that goods or services will meet
  certain standards (warranties) that sellers
  communicate to dealers but not to buyers.

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Implied Conditions/Implied Warranties

• Promises in law that sellers make to buyers
  through implication or suggestion.
• They include 3 basic promises.

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Basic Promises

• Seller has title to the goods and therefore has
  the right to sell them.
• Articles will be of good quality and fit for the
  buyers use (merchantable quality).
• The goods a buyer receives are the same as the
  samples/descriptions provided by the seller.
• If they are not the same, the buyer can return
  them and rescind the contract but it has to be
  done quickly.

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Done notes for today!