August 9, 2002BUSINESS LAW (Ms. Hawkins)1 Chapter 11 covers contractual obligations and their enforcement. 11-1 Transfer and discharge of obligations 11-2

August 9, 2002 BUSINESS LAW (Ms. Hawkins) 1

Chapter 11 covers contractual obligations and their enforcement.

11-1 Transfer and discharge of obligations11-2 Remedies of Breach of Contract11-3 The Marriage Contract and Divorce

CHAPTER 11: CONTRACTUAL OBLIGATIONS & ENFORCEMENT


Chapter 11 concludes our unit on contracts with a discussion of how contractual obligations are transferred and fulfilled, types of remedies, and finally practical application of contract principles with respect to marriage and principles.

11-1 Transfer and discharge of obligations11-2 Remedies of Breach of Contract11-3 The Marriage Contract and Divorce



The Transfer of Contract Rights and Duties

We will look at the following topics:Assignable RightsNon-assignable RightsForm of AssignmentsNotice of AssignmentsDelegation of Contractual Duties



The Transfer of Contract Rights and Duties

A transfer of a right a party may have under a contract to another is called an assignment.

The party who transfers the contractual right is the assignor and the recipient is the assignee.



What’s Your Verdict (Page 189)

Whipple bought a high-powered sports coupe from Upscale Motors for $32,000. After a down payment of $2,000, the balance, plus a finance charge, was to be paid by mail in installments over the following 48 months. Upscale Motors needed cash to restore its inventory of new cars. It immediately sold Whipple’s contract to a finance company, Palmout Inc., and told Whipple to mail all installment payments to Palmout.



What’s Your Verdict (Page 189)

Is such a transfer of contract rights legal?Yes. When Whipple was notified of the assignment, he became obligated to pay the finance company instead of Upscale Motors.The assignee receives exactly the same contractual rights and duties as the assignor.The person who owes a duty under the contract (Whipple) is called the obligor.



Assignable Rights

A party may assign contractual rights to another, provided the performance will not be materially changed.

Performance is the fulfillment of contractual promises as agreed.An example is when retailers assign to issuers of credit cards the

right to collect the amounts due from customers who use the cards.In exchange, the credit card companies immediately pay the

retailers the face amount of the credit slips, less an agreed percentage.



Non-assignable Rights

A right created under a contract that prohibits transfer of the contractual rights. Examples include:

Claims for damages for personal injuriesClaims against the United StatesRights to personal service, especially those of a skilled

nature, or when personal trust and confidence are involvedAssignments of future wages as limited by state statutes



Form of Assignments

An assignment is valid whether written or oral.Some state statutes require that some assignments be

written.



Notice of Assignments

The obligor must pay the assignee after notification.The assignee should promptly notify the obligor of the

assignment.



Delegation of Contractual Duties

A person who delegates contractual duties remains legally obligated and responsible for proper performance under the contract, even though someone else may so the required work.

A person cannot delegate to another any duty where performance requires unique personal skill or special qualifications.



Delegation of Contractual Duties vs. Assignment (What’ s the Difference?)

Assignment is transfer of contractual rights.Delegation is where someone other than the original

contractor complies with the duties or provides the required services.

BUT, the original contractor is still responsible for satisfactory performance to the holder of the contractual rights.



Discharge of Contractual Obligations

By PerformanceBy the Initial TermsBy Subsequent AgreementBy Impossibility of PerformanceBy Operation of LawBy Tender of Performance



Discharge of Contractual ObligationsBy Performance...

Most contracts are discharged by complete performance of the terms of the contract; else, courts would collapse.

Failure to provide complete performance is breach of contract.

When almost all of the duties are performed, except for a minor duty, substantial performance has occurred.

Failure to perform is a default. Notification that you will not perform before the contractual time of performance is anticipatory breach.




By the Initial Terms...Termination on a specific date or upon expiration of a

specified period of timeTermination upon the occurrence of a specified event (e.g.

mowing the yard until your return from vacation)Termination upon the failure of a certain event to happen

(e.g. construction loan contract upon failure to get a required building permit)




By Subsequent Agreement...The parties to an agreement may mutually agree to change the terms or nature of their relationship.

Rescission: agreement to undo the entire contractAccord and Satisfaction: replace entire contract with a new

oneNovation: release of a party from performance and

acceptance of a substitute party




By Impossibility of Performance...External conditions could prevent performance—war or embargo.

Unique subject matter is destroyed (e.g. burned Picasso)Performance becomes illegal (e.g. installing asbestos)Death/disability of the person to perform a service



Discharge of Contractual ObligationsBy Operation of Law...A contract may be discharged or the right to enforce it may be barred by operation of the law (e.g. debts discharged in bankruptcy free the obligor from creditors).Alteration (material change in the terms) can discharge the contract under these conditions:

A material change has occurredAlteration is made intentionallyAlteration is made by a party to the agreementAlteration is made without consent of the other party




By Tender of Performance...A ready, willing, and able offer to perform an obligation is a tender.

A tender that is made in good faith but is rejected will discharge the obligation of the one offering to perform.

A tender of only part of the debt is not a valid tender. If the debtor offers less than the amount due, the creditor may refuse it without losing the right to later collect the entire amount due.



Remedies Possible for Breach

Remedies (general)...A remedy means the action or procedure followed to

enforce a right or to get damages for an injury to a right.A tender that is made in good faith but is rejected will

discharge the obligation of the one offering to perform.A tender of only part of the debt is not a valid tender. If the

debtor offers less than the amount due, the creditor may refuse it without losing the right to later collect the entire amount due.




Remedy for a Minor BreachThe only remedy available for a minor breach is money

damages.

The injured party must continue performing the duties under the contract.

The primary guideline in determining if a breach is minor or major is the significance of the breach in relation to the entire contract.




Remedy for a Major BreachThere are 3 remedies available:

1. Rescission & Restitution,2. Money Damages3. Specific Performance.

The injured party does not have to continue performing the duties under the contract.




Remedy for a Major BreachRescission & Restitution :

Parties are placed in the same legal position that they were in before contracting.

Rescission allows the parties to treat the contract as cancelled.

Restitution permits the injured party to recover money or property given to the defaulting party.




Remedy for a Major BreachMoney Damages (5 types):

Compensatory: Parties are placed in the same financial position that they were in absent a breach.

Consequential: Parties are placed in the same financial position , if the contract had been performed.

Punitive: In cases of fraud or intentional tort, the intent is to punish and make an example of the defendant.




Remedy for a Major BreachMoney Damages (5 types):

Liquidated: Parties to a contract may agree that a certain amount of money will be paid if a certain breach occurs; the amount cannot be excessive in relation to the injury.

Nominal: In cases where no substantial harm is done, courts may award a token amount. This is because failure to perform a contractual duty is a legal wrong.




Remedy for a Major BreachSpecific Performance:

Sometimes the only appropriate remedy for breach of contract is to order that the breaching party do exactly what was required under the contract.

Courts are reluctant to grant specific performance In cases where they would have great difficulty in supervising the result (e.g., home construction).




Remedy for a Major BreachWhat’s Your Verdict? (Page 194)

Liu contracted to buy 16 acres of land from McCall. She planned to build an amusement park on the land that was near the junction of two interstates and had adequate utilities and population density. When McCall learned of her plan, he refused to transfer the title.




Remedy for a Major BreachWhat’s Your Verdict? (Page 194)

What is the optimal remedy for Liu?

Liu could likely win a suit for specific performance.

The court would order McCall to transfer title to the property with a properly signed deed delivered to Liu.




Factors Affecting Choice of Remedy We will discuss the following topics:

Conflict of Remedies

Duty to Mitigate

Waivers

Statute of Limitations

Bankruptcy




Factors Affecting Choice of Remedy Conflict of Remedies:

Injured parties must choose a remedy; often, electing to pursue one remedy will rule out pursuing another.

For example restitution and specific performance are essentially opposites, so you could not combine these remedies.




Factors Affecting Choice of Remedy Conflict of Remedies: What’s our Verdict? (Page 196)

Jim “high and tight” Brushback, an unknown baseball pitcher, signed a two-year contract to play for a major league team for $120,000 a year. After two months, Brushback had won all four games he’d started with 37 strikeouts and an earned-run average (ERA) of 1.75. He then contracted with a competing team for $12 million a year, thereby breaching his contract.



Remedies Possible for BreachFactors Affecting Choice of Remedy Conflict of Remedies: What’s our Verdict? (Page 196)

What remedies are available to the original team?

The original team could recover two month’s wages ($20,000) as restitution.

However, if the team elects this remedy, they would lose the ability to sue for damages and the ability to obtain an injunction to stop Brushback from playing for the other team.




Factors Affecting Choice of Remedy Duty to Mitigate:

A party injured by a breach of contract is required by law to take reasonable steps to minimize the harm done.

For example, in most states a landlord must take reasonable steps to re-rent an apartment vacated in breach of a lease.




Factors Affecting Choice of Remedy Waivers:

Sometimes a party intentionally and explicitly gives up a contractual right.

For example, if a creditor accepts a late payment without a late charge, this is a waiver.

If the debtor consistently sends late payments that are accepted, the right to collect a late fee specified in the contract on future payments may be waived.




Factors Affecting Choice of Remedy Statute of Limitations:

Statutes in all states deny any remedy if suit is not brought within a certain time after a legal claim, such as breach of contract, arises.

The clock starts ticking from the moment there is a right to sue.

A minor is given a reasonable time after reaching majority to file suit.



Remedies Possible for BreachFactors Affecting Choice of Remedy Bankruptcy:

Bankruptcy s a legal proceeding whereby a debtor’s assets are distributed among creditors to discharge the debtor’s debts

Under the U.S. Constitution, Congress has established uniform laws on bankruptcies that permit the discharge (excusing) of debts.

Debtors get a fresh start and creditors share fairly in whatever assets are left.



The Marriage Contract and Divorce

Marriage and Contracts Marriage is a legal union of a man and woman as husband

and wife.Typically, the minimum age for marriage without parental

consent is 18.Some states restrict marriage between close relatives.Some states have tried to restrict marriage between parties

of different races (Loving v. Virginia, 1967)

http://www.quimbee.com/index.php/quimbee/case_detail/Loving%20%20v.%20%20%20Virginia/706995



The Marriage Contract and DivorceMarriage and ContractsLoving v. Virginia (1967)

Rule of Law: A state may not restrict marriages between persons solely on the basis of race under the Equal Protection and Due Process Clauses of the Fourteenth Amendment.

“It is simply not possible for a state law to be valid under our Constitution which makes the criminality of an act depend on the race of the actor (U. S. Supreme Court)."



Is consensual premarital intercourse a crime?

Criminal laws against this have generally been eliminated over the past couple of decades.




What does Georgia law say about consensual premarital intercourse?

It had been a crime since 1833.In 2003 the Georgia Supreme Court abolished a 170 year old law prohibiting sexual relations outside of marriage.




Is there a minimum legal age for dating?

No.




The Marriage Contract and DivorceMarriage and ContractsWhat’s Your Verdict? (Page 199)

Jim and Mary are both 16 years old. While dating they have intimate relations, and Mary becomes pregnant.



Marriage and ContractsWhat’s Your Verdict? (Page 199)

Will the law compel Jim and Mary to get married?

No law exists to force parents of an illegitimate child to marry. The law does however does require the responsible identified male parent to pay medical bills related to the pregnancy and child support.




The Marriage Contract and DivorceMarriage and ContractsWe will cover these topics:

Contractual Elements of Premarital Relationships

Contractual elements of Marital Relationships

Common-Law Marriage



The Marriage Contract and DivorceMarriage and ContractsContractual Elements of Premarital Relationships:

If one party in a heterosexual relationship proposes marriage and the other accepts, a binding contract results.

If both later mutually agree to end their engagement, the law considers their agreement void and never to have existed.

If only one party wants out, a breach-of-promise suit may be brought by the other party.



The Marriage Contract and DivorceMarriage and ContractsContractual Elements of Premarital Relationships:

If one party in a heterosexual relationship proposes marriage and the other accepts, a binding contract results.

If both later mutually agree to end their engagement, the law considers their agreement void and never to have existed.

If only one party wants out, a breach-of-promise suit may be brought by the other party.



CHAPTER 18: MARRIAGE & DIVORCE

How do courts handle breach of promise suits?

Courts will generally not enforce a breach of contract to marry, and any lawsuit based on such a breach should be thrown out … unless there are other, more viable allegations involved (pregnancy). Lawsuits based on breach of contract to marry used to be allowed under common law, but are now banned by statute in most states.

http://law.gsu.edu/library/alr/gtaylor.htm




Will damages be awarded if a third party interferes with an engagement?Some states allow for damages, EXCEPT against parents.

Does the ring have to be returned if the marriage is called off?Yes, depending on the state. The recipient can keep gifts other than those given in expectation of marriage.




The Marriage Contract and DivorceMarriage and ContractsContractual Elements of Premarital Relationships:Statutory Requirements (How Do I Get Married?)

Follow the laws of the state you marry in.Apply and pay for a marriage license ($65 in Georgia).Take blood test to check for communicable diseases (Not as of 7/1/03).A waiting period of 3 days between application and issuance is common

(no waiting in Georgia).Court clerks, mayors, judges, rabbis, ministers, priests, and ship

captains can perform the ceremony.

http://www.weddingvendors.com/marriage-license-laws/united-states/georgia/




U. S. Marriage Statistics

Sex 1960 2012

Men 23.0 28.3

Women 20.0 25.8

Median age for first time marriages

http://foryourmarriage.org/factsfigures/




Minimum age for marriage with and without parental consent?

State Age with Parental Consent

Age Without Parental Consent

Alabama 14 18

California No age limit 18

Georgia 16 18

http://www.law.cornell.edu/topics/Table_Marriage.htm




Minimum age for marriage with and without parental consent?

State Age with Parental Consent

Age Without Parental Consent

MA and KS 14 M; 12 F 18

Texas 14 18

Puerto Rico 18 M; 16 F 21

http://www.law.cornell.edu/topics/Table_Marriage.htm




Marriage and ContractsContractual Elements of Marital Relationships:

Marital Consortium is the practical and legally recognized purposes for marriage to include procreation, raising children, and filling sexual, economic, and companionship needs.

It is possible to sue for “loss of consortium.”




Marriage and ContractsContractual Elements of Marital Relationships:

Rights and Duties of Parenthood

Parents are obligated by state laws to support their children until they reach adulthood.

Adoptive parents have the same rights and duties as biological parents.



The Marriage Contract and DivorceMarriage and ContractsContractual Elements of Marital Relationships:Property Rights and Duties

Property acquired during the marriage may be kept in the name of the husband, the wife, or both.

Keeping a spouse from getting property rights can be accomplished with a prenuptial agreement.



The Marriage Contract and DivorceMarriage and ContractsCommon-Law Marriage

Common-law marriages have their roots in the frontier due to absence of legal methods to become man and wife.

Today about one-fourth of our states fully allow common-law marriage.



The Marriage Contract and DivorceMarriage and ContractsCommon-Law Marriage

In the state of Georgia, a marriage can have common law status if created before 1/1/97.

If a couple is in a common law marriage, is a legal divorce necessary for dissolution of this union?

Yes.




Ending the Marriage ContractWe will discuss these topics:

By Annulment

By Divorce

• Separation

• No-Fault Divorce

Typical Issues in a Divorce




Ending the Marriage ContractWe will discuss these topics: Annulment

An annulment is a court order that cancels a marriage because of a problem that existed from the beginning of the marriage.

Annulments end marriage considered to be void or voidable.




Ending the Marriage ContractWe will discuss these topics: Annulment

Voidable marriages can be the result of refusal to have children, or fraudulent grounds for the marriage contract.

Fraud includes lying about wealth, condition of pregnancy, freedom from disease, past marriage, concealment (addictions, felony convictions), or age.

A void marriage occurs when laws are violated (e.g., bigamy).




Ending the Marriage ContractWe will discuss these topics: Divorce

Divorce is the usual method used to end marriage (also called dissolution).

Divorce is a court action that terminates the marriage and divides property and remaining responsibilities.





In many states the first step toward divorce is separation.

If parties fail to reconcile during the period of separation, the separation agreement will often become the basis for the final divorce decree.





In a no-fault divorce, there is no assignment of fault.

Both spouses agree that "irreconcilable differences" have arisen.

Neither time nor counseling will savethe marriage; it simply will not work.




No-Fault DivorceaWhat’s Your Verdict? (Page 270)

Jerry and June married when they were very young. As the years passed, they grew apart. June wanted a divorce so she could “move on with her life.” However, she did not have any real grounds for requesting one. Jerry had not been abusive, cruel, adulterous, or deserting. June had just grown tired of living with him.




No-Fault DivorceWhat’s Your Verdict? (Page 270)

Can June still get a divorce?

She could get a divorce even though there were no possible grounds for it other than being bored with Jerry. She can initiate a no-fault dissolution based on irreconcilable differences.




Grounds for At Fault Divorce

Cruelty Desertion Adultery Confinement in Prison Physical Inability to Engage in Sex (if not

disclosed prior to marriage)

http://www.divorcelawinfo.com/Pages/grounds.html




Divorce Issues to be Resolved

Typical Issues:

Division of Property Child Custody Child Support Visitation Alimony (support paid by wage earner)





Division of Property

In most states, the property brought into the marriage by a spouse will remain that spouse’s property.

The exception is community property states (e.g., California)





Child Custody

Under the Marriage and Divorce Act, the court usually considers such factors as:•parent’s wishes•child’s wishes•child’s relationship with parents•child’s adjustment to the home•physical and mental health of all parties





Child Support

This is the monetary payment by a parent to provide a dependent child with appropriate economic maintenance.





Visitation

This is not related to child support. One cannot block court ordered visitation due to non-payment of child support.





Alimony

This is the support pad by the wage earner of the family to the other spouse. It may be paid at regular intervals or in lump sum.

Factors considered are the paying spouse’s income, number of dependents, earnings outlook, current debts, and number of spouses (former and subsequent).







The End!


Documents

August 9, 2002BUSINESS LAW (Ms. Hawkins)1 Chapter 11 covers contractual obligations and their enforcement. 11-1 Transfer and discharge of obligations 11-2