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When is a party relieved from her obligations under a contract?
Parties to a contract have duties or obligations thereunder. There are generally three options to relieve these obligations:
Perform – An individual is relieved from her duties under a contract once she has fully or substantially performed those duties. The individual is “discharged” from the contract.
Release from Contract – Either party may be released from a contract by the other party. Alternatively, the person may be released if the contract becomes void.
Breach – Once a party to a contract breaches that contract, she and the other party no longer have duties to perform. If the contract is enforceable, the other party then has the ability to enforce the contract against the other party by seeking damages.
Performance of the contract and release eliminate a person’s liability under the contract. Breach exposes the breaching party to damages or losses suffered for the breach. None of these options relieve a party form tort liability if her actions with regard to the contract constitute a tort.
Discussion: Should a party pursue the method of relieve her obligation under a contract that is of greatest advantage to her? Why or why not?
Practice Question: Katie and Smith enter into a contract. Each has a duty to perform services for the other. Neither party ever takes action to act on the contract. What is the result?
- Generally, one party to a contract has a duty to begin performance (or tender performance) before the other party has the obligation to perform. In this situation, we are not told who has the initial obligation. In that regard, one party is breach. As such, the other party is relieved from her duty to perform. If the parties had a simultaneous duty to perform, and neither performed, this may evidence a mutual assent to rescind (undo) the contract.