06.02 Performance, Discharge, and Breach Flashcards
When is performance due?
While a contract may have a date for performance, there are certain steps (conditions) that must be met before a party can begin performance. Without those conditions being met, the duty to perform does not exist and there cannot be a breach of the contract when the conditions necessary for performance have not been met.
What is a conditions precedent?
A condition precedent is something that must be present or occur before a party has a duty to perform.
What is a conditions subsequent?
A condition subsequent is something that must be present or occur after a duty to perform has arisen.
What is a conditions concurrent?
All contracts have conditions in the sense of the bargained-for exchange. Each party’s duty to perform under a contract is dependent upon the other party’s duty to perform at the same time. All contracts have some form of condition concurrent.
What are the effects of conditions on the duty to perform?
When conditions are met, the duty to perform exists. If the conditions are not met, then the duty to perform is discharged.
What are the requirements for substantial performance?
- Is it, for practical purposes, just as good?
- Was it done in good faith?
- Can the nonbreaching party be compensated?
What constitutes performance under the UCC?
The goal of UCC Article 2 is to have the parties do all that is possible to get the contract performance completed. To do that, both buyers and sellers have the right of assurance and the duty of cooperation.
What is right of assurance?
If a party has “reasonable grounds” to believe that the other party will not perform as contracted, the concerned party may demand in writing that the other party give adequate assurance of due performance. If the party does not provide reasonable assurance as demanded within 30 days, the failure to provide those assurances is a repudiation of the contract and can be treated as an anticipatory breach.
True or False: The right of demand assurances exists only in UCC subject matter contracts.
True. Common law contracts do not have an equivalent right to demand assurances.
What are the buyer’s rights and requirements in determining performance and breach (UCC)?
Right of inspection, rejection, acceptance, and revocation of acceptance.
In what ways can a contract be discharged?
Discharge can be accomplished by performance, agreement of the parties, operation of law, and a breach by the other party.
What is discharge by performance?
If the contract is fully performed, the parties are discharged.
If there is substantial performance, there is also discharge.
What is discharge by agreement?
Rescission - the parties agree to cancel the contract and are restored to their original position before the contract existed. The rescission is supported by consideration because both sides are giving up their rights to litigate under the contract to determine if there has been a breach.
Accord and Satisfaction - one duty substituted for another and the original duty is discharged when the substituted duty is performed.
Novation - one party accepts the performance of a third party in place of the party obligated under the original contract. Both the original parties to the contract as well as the third party being substituted must be parties to the novation agreement.
What is discharge by operation of law?
Impossibility; impracticability; death or incapacity of the party obligated to perform; discharge in bankruptcy; illegality of services to be performed or contract subject matter.
What is discharge by breach by other party?
Violation of contract terms
Anticipatory repudiation - a breach of contract in advance of the time of performance; the nonbreaching party can choose remedies.
