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Unit 10

Discharge and Redemies

Исполнение обязательств и средства их обеспечения

Исполнение обязательств может обеспечиваться неустойкой, залогом, удержанием имущества должника, поручительством, банковской гарантией, задатком и другими способами (главы 21–26 ГК РФ).

List of key terms and word combinations:

– actual damages – фактический, реальный ущерб

– anticipatory breach – прекращение (договора) до наступления срока исполнения

– compensatory damages – компенсаторные, реальные, фактические убытки

– complete performance – оконченное исполнение; совершение

– condition concurrent – взаимозависимые условия (подлежащие одновременному исполнению)

– condition precedent – предварительное условие

– condition subsequent – последующее, резолютивное, отменительное условие

– consequential damages – косвенные убытки

– general release – отказ от настоящих и будущих притязаний, общий отказ

– incidental damages – побочные, случайные убытки

– injunction – судебный запрет

– liquidated damages – заранее оцененные убытки; оценочная неустойка; ликвидные убытки

– mutual rescission – взаимное аннулирование, прекращение

– nominal damages – номинальные убытки; номинальное возмещение, имеющее символическое значение

– performance – исполнение; совершение

– punitive damages – убытки присуждаемые в качестве наказания

– reasonable time – разумно необходимый срок

– satisfactory performance – достаточное, убедительное исполнение

– specific performance – исполнение в натуре, реальное исполнение

– speculative damages – предполагаемые убытки

– substantial performance – исполнение всех существенных условий договора

– tender of payment – предложение платежа

– tender of performance – предложение исполнения

– termination by waiver – отказ правообладателя от чего-либо

Most contracts are discharged by performance, which means that the parties do what they agreed to do under the terms of the contract. When performance occurs, the obligations of the parties end. Sometimes, however, the parties do not perform in a timely or satisfactory manner. At other times, they perform partially but not completely. At still other times, they do not perform at all.

When the time for performance is not stated in the contract, the contract must be performed within a reasonable time. A reasonable time is the time that may fairly, properly, and conveniently be required to do the task that is to be done, with regard to attending circumstances.

When either personal taste or objective standards have determined that the contracting parties have performed their contractual duties according to the agreement, satisfactory performance exists. Satisfactory performance is either an express or implied condition of every contract.

When both parties fully accomplish every term, condition, and promise to which they agreed, complete performance occurs. When a party, in good faith, executes all promised terms and conditions with the exception of minor details that do not affect the real intent of their agreement, substantial performance occurs. Complete performance terminates an agreement, discharging the parties of any further obligation to one another. Ordinarily, substantial performance also serves to discharge the agreement but with a difference. A party, who complains that performance has been substantial, but not complete, has the right to demand reimbursement from the offending party to correct those details that prevented complete performance.

Failing to fulfill or accomplish a promise, contract, or obligation according to its terms defines nonperformance.

Parties to a contract may stipulate the time and conditions for termination and discharge as part of their agreement. They also may subsequently agree not to do what they had originally promised. The latter is the case when there is a mutual rescission of the contract, a waiver of performance by one or more of the parties, a novation, or an accord and satisfaction to liquidate an outstanding debt or obligation.

During contract negotiation, parties may agree to certain terms that provide for automatic termination upon the occurrence or nonoccurrence of stated events. These terms are categorized as conditions subsequent.

Contracting parties may, either before or after performance commences, rescind their contract as a result of further negotiation and by their mutual assent. Mutual rescission requires both parties to return to the other any consideration already received or to pay for any services or materials already entered.

When a party with the right to complain of the other party's unsatisfactory performance or nonperformance fails to complain, termination by waiver occurs. It is a voluntary relinquishing (waiver) of one's rights to demand performance. A waiver differs from a discharge by mutual rescission in that a waiver entails no obligation by the parties to return any consideration that may have been exchanged up to the moment of rescission. Discharge by waiver, when made, is complete in itself.

By novation, the parties to a contract mutually agree to replace one of the parties with a new party. The former, original, party is released from liability under the contract.

An accord and satisfaction is a resulting new agreement arising from a bona fide dispute between the parties as to the terms of their original agreement. The mutual agreement to the new terms is the accord; performance of the accord is the satisfaction. The accord, although agreed to, is not a binding agreement until the satisfaction has been made. The original agreement is not discharged, therefore, until the performance or satisfaction has been provided as promised.

A general release is a document expressing the intent of a creditor to release a debtor from obligations on an existing and valid debt. A general release terminates a debt and excuses the debtor of any future payment without the usual requirement that consideration be given in return.

Occasionally, it becomes impossible to perform a contract. Conditions that arise subsequent to the making of a contract may either void the agreement or make it voidable by one of the parties. Discharge through impossibility of performance may, in some situations, be allowed only if the specific and anticipated impossibility has been made a condition to the agreement.

The performance of a promised act may be discharged by operation of law. Some law that causes the parties to be discharged from their obligations, such as bankruptcy or the statute of limitations, comes into play.

A discharge in bankruptcy from a court will be allowed as a defense against the collection of most, but not all, debts of the bankrupt. Therefore, most contractual obligations to pay money come to an end when a party files for bankruptcy.

Statutes providing time limits within which suits may be brought are known as statutes of limitations. The statute of limitations does not technically void the debt, but it gives the debtor a defense against any demand for collection.

When contractual obligations terminate by agreement or by operation of law, no liability falls to either party. When one of the parties fails to carry out the terms of a contract, a breach of contract occurs and liability falls to the party who has not done what was promised. Breach of contract comes from negligent or intentionally wrongful performance, expressed repudiation of contractual obligations, or an abandonment of performance sometimes after performance has begun. When there is a breach of contract, the injured party has the right to a remedy in court.

Wrongful performance or nonperformance discharges the other party from further obligation and permits that party to bring suit to rescind the contract or to recover money to compensate that party for any loss sustained. Such compensation is known as damages.

An anticipatory breach (also called constructive breach) occurs when a party to a contract either expresses or clearly implies an intention not to perform the contract even before being required to act. The repudiation must be clear and absolute. It must also indicate a deliberate and complete refusal to perform according to the terms of the contract. Injured parties may seek damages by showing that by relying on the contract.

Damages describe money awarded to parties who have been victimized or have suffered injury to their legal rights by others. Damages are of different kinds, and the nature of a claim usually determines what type of damages will apply.

A sum of money equal to the real financial loss suffered by the injured party defines actual damages. Since they are intended to compensate the injured party, actual damages are also called compensatory damages. Thus, damages awarded for nondelivery of promised goods or services would be an amount equal to the difference between the price stated in the contract and what the promisee would have to pay elsewhere.

Incidental damages and consequential damages are awarded for losses indirectly, but closely, attributable to a breach. Incidental damages cover any expenses paid out by the innocent party to prevent further loss. Consequential damages result indirectly from the breach because of special circumstances that exist with a particular contract. To recover consequential damages, the injured party must show that such losses were foreseeable when the contract was first made.

Damages awarded in excess of actual, incidental, or inconsequential damages where it is shown that the wrongful party acted with malicious intent and willful disregard for the rights of the injured party are punitive damages, also called exemplary damages.

Token damages awarded to parties who have experienced an injury to their legal rights but no actual loss are nominal damages. In today's practice, the award is usually one dollar.

Speculative damages are computed on losses that have not actually been suffered and that cannot be proved; they are damages based entirely on an expectation of losses that might be suffered from a breach. They differ from future damages in that speculative damages are not founded on fact but only on hope or expectation.

A decree of specific performance is a court order calling for the breaching party to do what he or she promised to do under the original contract of the unique subject matter.

An injunction is an order issued by a court directing that a party do or refrain from doing something. An injunction may be either temporary or permanent.


Exercise 1. Comprehension questions:

1. In what terms must be the contract performed when the time is not stated in the contract?

2. How is satisfactory performance of the contract determined?

3. How may be the contractual conditions classified?

4. What does a condition precedent require?

5. Explain what is a condition concurrent.

6. Think of examples of conditions subsequent.

7. What does tender of performance mean?

8. What does mutual rescission require?

9. Contrast termination by waiver and mutual rescission.


Exercise 2. Find in the text English equivalents to the following:

Прекращение договора до наступления срока исполнения; компенсаторные убытки; оконченное исполнение; взаимозависимые условия; предварительное условие; общий отказ; побочные, случайные убытки; оценочная неустойка; номинальное возмещение; исполнение; убытки, присуждаемые в качестве наказания; разумно необходимый срок; достаточное исполнение; реальное исполнение; исполнение всех существенных условий договора; предложение платежа; предложение исполнения; отказ правообладателя от чего-либо.


Exercise 3. Consult recommended dictionaries and give words or phrases to the following definitions:

Исполнение обязательств надлежащему лицу; исполнение обязательств третьим лицом; исполнение альтернативного обязательства; солидарные обязательства; встречное исполнение обязательства; исполнение обязательств по частям; валюта денежных средств; признание права; взыскание убытков; присуждение к исполнению обязанностей в натуре.


Exercise 4. Be ready to talk on one of the following topics:

1. Compare the different ways the court enforces performance of a contract.

2. Describe the standards that are used to determine whether or not the performance of a contract is satisfactory.

3. Contrast complete performance with substantial performance.

4. Discuss the ways that contracts are discharged.

5. Identify the remedies that are available to an injured party when a contract is breached.


Exercise 5. Make up your own dialog on the case: In Grandi v. LeSage, the buyer purchased a racehorse for breeding purposes. The seller had represented the horse to be a stallion; in fact, the horse was a gelding. The buyer revoked acceptance and brought suit to recover purchase price and incidental damages. The final award included incidental damages for the care, feeding, and maintenance of the horse for about three month at $1.50 per day.









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