Text 4 Discharge of Contract

When a contract is made, the parties take on certain duties and obligations. Discharge of contract (termination of obligations) occurs when the parties perform the contract as promised. Or it occurs when the parties are released from their responsibilities by action of the other party or by law. Generally contracts are discharged by performance; most parties do perform as they have promised. Partial performance does not discharge the obligation.

Frequently, complex contracts are discharged by substantial performance. This occurs when there is only a minor modification or failure to fulfill all terms of the contract. The performance is incomplete but substantial.

An appropriate allowance is made in the price to cover the deviation. If the deviation is deliberate, the victim may treat it as a breach.

Failure to perform in accordance with the contractual terms is a breach of contract; this gives the other party the right to cancel. Sometimes a party who defaults (fails to perform) notifies the other party to a contract before the time of performance has arrived that he or she will not perform. This is called an anticipatory breach of contract. The victim may wait until the promised time of performance, or the victim may treat the default as a breach of contract and immediately sue for damages.

Breach of contract by one party may give the other party the right to treat his or her obligation as discharged or terminated. When one party terminates a sales contract because of a breach of the other party, the word cancellation is used.

A contract that calls for payment in money requires payment of the exact amount on the specified date. The one to whom the money is owed need not accept anything else.

Frequently a check is given in payment of a debt that is payable in money. Acceptance of the check merely suspends the debt while the check is being processed in the banking system for collection. The debt is not discharged until the check is paid by the bank on which it was drawn.

When a contract states that performance must be completed on or before a specified date, and that “time is of essence”, failure to perform by that date, is generally regarded as a breach of contract. However, if no loss is caused by a delay, time is not critical. In such cases, the “essence” clause may be ignored by the courts. When no precise date is specified, performance within a reasonable time suffices.

Vocabulary

discharge of contract прекращение договорных обязательств; исполнения договора

to suspend приостанавливать

allowance скидка

proceeding преследование судебным порядком

to default не выполнять своих обязательств (по контракту, соглашению, долгу)

acceptance 1) принятие, признание; 2) акцептирование, приемка (например, счета или векселя) к оплате

substantial performance исполнение всех существенных условий договора

breach of contract нарушение контракта

cancellation аннулирование; отмена

collection получение денег (по векселям); взыскание; инкассирование

anticipatory breach of contract нарушение договора до наступления срока исполнения