WORD AND PHRASE LIST EXAM IV Be familiar with conditions as they relate to time for performance in a contract.

. Know the difference and use of express, implied in fact, concurrent, conditions precedent and conditions subsequent. Express conditions: o Definition: condition explicitly stated in contract o Usually preceded by words such as conditioned on, if, provided that, or when) Implied in fact conditions: o Definition: condition not explicitly stated, but inferred from nature and language of contract o For example: if one enters into a contract with a builder to replace the windows in ones house, there is an implied condition that the builder will be given access to the home so that she may fulfill her obligations under the contract Concurrent conditions: o Definition: each partys performance conditioned on simultaneous performance of the other o The legal effect of a contracts being concurrently conditioned is that each party must offer to perform before being able to sue the other for nonperformance Condition precedent: o Definition: particular event that must occur for a partys duty to arise o If the event does not occur, the partys duty to perform does not arise o Example: an even such as the buyers being able to sell his current home by a certain date. If the home does not sell, the condition does not arise, thus the parties have no duty to perform and are discharge from the contract Conditions subsequent: o Definition: future even that terminates obligation of parties when it occurs o Example: John may enter into an agreement to lease an apartment for 5 years, conditions on his not being called to active duty in the National Guard. If he is called to serve, his obligation to be bound by the lease is discharged. Accord and Satisfaction how and when is it used? This is a form of discharge by mutual agreement This is used when on party wishes to substitute a different performance for his original contractual duty Duty under first contract not discharged until new duty is performed Accord: o Definition: promise to perform new duty; when A agrees to accept new performance

Satisfaction: o Definition: actual performance of duty Example: A promises to pay B $500 if B washes As car. Then A promises to pay B $500 and B promises to cut As grass. (Bs new promise is the accord). When B actually cuts As grass is the satisfaction. B will not be discharged from washing car and cutting grass until he cuts the grass

Novation how and when is it used? Parties to contract wish to replace one of the parties with a third party This is a form of discharge by mutual agreement Is the substitution of a party Original duties remain the same under contract, but one party is discharged and 3rd party takes original partys place All of the parties must agree to the novation for it to be valid Material Breach what is a material breach? What effect does it have on the non-breaching partys obligation under the contract? Definition: nonperformance that significantly impairs the aggrieved partys right under the contract If the breach is intentional, breaching party is charged with damages and non-breaching party is discharged Failure of notifying on time of the essence = MB As long as parties agree on something it can be MB Substantial performance what are its implications? What are the requirements before a person can request specific performance as a remedy? Definition: occurs when nearly all of the terms of an agreement have been met, there has been an honest effort to complete all terms, and there has been no willful departure from the terms of the agreement Does not discharge non-breaching parties Ex.) if a contract called for all bedrooms of a house to be painted blue but one was inadvertently painted green, the court may require that the contractor compensate the buyer by the amount that it will cost the buyer to have the room painted The requirements before a person can request specific performance as a remedy is that the situation has to be unique. Discharge when does it happen? What are the ways a person can be discharged from their contractual obligations? Definition: you do not have to perform your duty to the contract Discharge by mutual agreement

Mutual rescission: both parties agree to discharge each other from their mutual obligation; there needs to be a second contract discharging both o Substituted contracts o Accord and Satisfaction o Novation
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Discharge by Operation of Law o Alteration of contract o Bankruptcy o Tolling of stature of limitations o Impossibility of performance o Commercial impracticability o Frustration of purpose Circumstances resulting in discharge of a contract o Occurrence or non-occurrence of a condition o Complete or substantial performance o Material breech o Mutual Agreement o Operation of law

Specific performance when can this remedy be used? Definition: order requiring breaching party to fulfill obligations under contract Usually awarded only when monetary damages inadequate and subject matter of contract unique No amount of money will do If the situation is unique, then this is available. Can only be used as a remedy when you have no legal options Ex.) The owners of your great grandparents barn are selling the barn. You sign a contract to buy the barn and then the owners back out. You are able to use specific performance because of the uniqueness of the case Compensatory damages what are the factors in determining these types of damages? Definition: money awarded to the plaintiff according to the amount of actual damage or harm to property, lost wages or profits, pain and suffering, medical expenses, disability, etc. Damages designed to put plaintiff in position he would have been in had contract been fully performed Damages less expenses saved Incidental damages what are they?

In addition to losing the benefit of the bargain, the plaintiff may suffer other losses directly caused by the breach = incidental damages Example: Jeremy was unfairly terminated before his contractual term was over, he may have to spend money to find another job. His job search expenditures would be considered incidental damages

Consequential damages what are they? Also known as special damages Definition: are foreseeable damages that result from special facts and circumstances arising outside the contract itself Injunction or injunctive relief what is it? When can it be used? Definition: an order either forcing a party to do something or prohibiting the party from doing something Most commonly prohibitions against actions Used when there is no way to adequately calculate the damages that would arise from situation Irreparable harm: harm that is not repairable When you go to court, you enjoin someone an order prohibiting someone from doing something What is a power of attorney? Definition: a specific form of express authority, granting n agent specific powers It is a document that gives an agent authority to sign legal documents on behalf of the principal Can be general or specific o General power of attorney: a principal gives an agent broad authority to sign legal documents on behalf of the principal o Specific power of attorney: a principal gives authority to an agent only for the specific areas or purposes listed in the agreement Health care instance: a principal gives power of attorney to an agent so that the agent can make decisions about the principals medical care in case the principal cannot make those decisions What are the duties of a principal to an agent and of an agent to a principal? Duties of an agent to a principal o Loyalty Fiduciary Duties Duty to not have conflict of interest Duty to keep principal informed

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Duty to keep information confidential Duty to account for financial benefits Performance = diligence Notification = the duty to inform Obedience Accounting

Duties of a principal to an agent o Compensation: to pay the agent (only true if in the agreement) o Indemnification: paid back because of claims you paid = legal losses you sustained o Cooperation and Safe Working Conditions

Indemnification what is it? When is it used? Definition: when a party is paid back because of claims you have paid Also known as legal losses you have sustained When sued by a third party, a principal may sue his agent to recover the amount assessed to the third party if the breach of contract is the agents fault What is a gratuitous agency as compared to a contractual agency and what are the real differences between the two? Gratuitous agency: is one who acts without consideration; that is they are not paid for their services Contractual Agency: there is consideration Disclosed, partially disclosed and undisclosed principals what are the contractual implications with regard to the agent and the third party? Disclosed principal: agent not liable, and principal is liable o The third party is aware that an agent is making an agreement on behalf of a principal and the third party also knows the identity of the principal Partially disclosed: agent is partially liable and the principal is liable o The third party is aware that an agent is making an agreement on behalf of a principal but the third party is unaware of the identity of the principal Undisclosed principal: agent and principal are both liable o The third party does not know an agent is acting on behalf of a principal REMEMBER! The classification of the principal is important because it is an important factor in determining the liability of the principal Ratification of an unauthorized agent what is it?

Definition: agency that exists when individuals misrepresents themselves as an agent for another party, and principle accepts/ratifies unauthorized act Requirements for Agency by Ratification o Individual misrepresents themselves as agent for another party o Principal accepts/ratifies unauthorized acts o Principal has complete knowledge of all material facts regarding contract; also known as full disclosure o Principal must ratify entirety of agents act

Express authority, implied authority and apparent authority who has what and why do we care? Express authority: an agency created in written or oral agreement o Principal explicitly instructed agent to perform an act Implied authority: the relationship that is inferred from the conduct of the parties o The authority of the agent is implied on the basis of words and actions of the principal to the agent Apparent authority: exists when the third party reasonably believes that an agency relationship exists between principal and another individual o Thus if the third party reasonably believes the agent has authority to represent the principal, the principal must uphold any agreements made with the agent who has apparent authority Fiduciary duty of the agent The agent has a responsibility to act in the interest of the principal o Duty to not have conflict of interest o Duty to keep principal informed o Duty to keep information confidential o Duty to account for financial benefits Agency coupled with an interest Definition: an agency relationship created for the benefit of the agent, not the principal Known as power given as security The agency relationship is terminated when an event occurs that discharges the principals obligation Capacity of principal and agent The principal and 3rd party must have capacity It is ideal in interest of the principal to have an agent that has capacity but it is not mandatory Termination of agency relationship either by the parties or as a matter of law

Termination of Agencies by the Parties o Acts of the parties o The parties can agree to terminate agency o Principal revocation: when a principal takes back the initial offer and annuls the opportunity for the agent to accept the offer o Agency renounce: the agent can terminate the agency relationship by renouncing the authority given to the agent o Principal wants to get rid of agency/agent but owes agent money Termination of Agencies as a Matter of Law o Principal files bankruptcy o Principal dies/becomes incapacitated o Subject matter of agency destroyed o Agent doesnt maintain license or skill level o Subject matter of agency becomes illegal o If you are an agent in a foreign country and principal is in another country, and those 2 countries declare war on each other