University of Georgia Terry College of Business LS 470 - Business Law I Dr. B-A's Word Outlines EXCUSES FOR NONPERFORMANCE & DISCHARGE I. Excuses for nonperf relieves pty fr duty to perf or liabty for br (5) legally recognized excuses 1. hinderance, prevention, noncooperation must be wrongful excuses nonperf by other pty 2. waiver-no intent to enforce rights under K can be made B4 or after breach can be retracted unless supported by consid., or pty made substl change in positn in reliance 3. impossbty of perf (4 types) more than mere hardship more difficult or expensive doesn't const it must render perf physically & objectively impossble subjective impossbty not enuf if impossible, both pties discharged Acts of God not nec impossbty must provide for no liab for it in K Impossibly includes (4) illegality - becomes illegal to perf death or incapacitating illnss if pers serv K destructn of subj matter essentl to K relieves both essential element lacking not well defined by law akin to mutual mistake neither pty at fault neither know of missing element EX-agree to build bldg but neither knew ground made it impossible 4. commercial frustration excuses perf when essen purp & value of K frustratd something happens to prevent obj or purp of K unforseen by either pty more than hardhip, but less than total impossibty intervening, fortuitous, unforeseebl event makes orig purp moot 5. commerical impracticabilty (UCC) similar to commercial frustration w/o fault of either unexpected development or gov't action substituted perf may be ok unforseen shutdown of major supply source, crop failure, war ok S must notif customers seasbly of delay or nondeliv upon notice of same, B can either * terminate K as to delivery, * terminate & discharge the entire K if the deficy substan impairs valu of whole K, or * modify K & agree to take availbl quota in substitn if not done w/i reasbl time (not exceeding 30 days), K lapses as to delivs cov by S's notice II. Discharge-pties no longer have duties under K (9 ways) recissn renunciatn cancellatn surrender novation pmt accord & satisfactn stat of limitation performance release formal written stmt that pty discharges other pty fr K amts to covenant not to sue renunciation stmt that pty dischs other pty can still sue if no consid equiv to release if written & deliv, no consid nec & amts to a release cancellation & surrender of written K reqs consid or proof of gift evid of oblig, not same as obligatn itself, i.e., promissory note novation pties agree to subst perf by 3d pty & released payment gen cash, UOA gen pmt by nego instr is cond'l its final if pmt made at maturity of instrumt if not, debt still exists as B4 pties may agree that pmt by NI is absolute disch if instru not pd at maturity, only recourse is on instr, not K bec already agreed 2 take instru,th4 K dischgd receipt of pmt usu suffices as evid of pmt & disch cancelled check ok, tho shd on ck what its for if debtor owes more than 1 debt to same creditor, debtor can direct how pmt is to be applied if no instructns fr debtor, creditor can apply as s/he wishes if applied to debt barred by stat of lim, doesn't revive claim if pmt comes from 3d pty, i.e., surety, creditor must protect 3d pty's positn, i.e., not apply to other claims debtor has 1st accord and satisfaction agmt to change consid - Accord performance - Satisfactn must be disputed debt see prev. notes statute of limitations running if pmt made on debt, promise to pay or ackmt of debt after stat runs., stat period starts anew no new consid nec if minor or insane, stat stops running can bring actn after reaching maj or becoming sane UCC - 4 yrs can't be extended can be reduced to not less than 1 yr. Restmt - varies fr state to state