5) Performance, Modification, Excuse Flashcards
UCC ROL: seller’s obligation
transfer and deliver goods
UCC ROL: buyer’s obligation
accept and pay for goods
UCC ROL: if seller bears ROL and something happens to goods…
seller must provide replacement goods
UCC ROL: if buyer bears ROL and something happens to goods…
buyer must pay k price regardless
UCC ROL: carrier case (def)
parties agree to use common carrier
UCC ROL: non-carrier case: when does ROL transfer to buyer?
1) if seller is NOT a merchant –> as soon as goods made available (tendered) to buyer
2) if seller IS a merchant –> when goods are physically in buyer’s possession
UCC ROL: carrier case: when does ROL transfer to buyer?
1) if shipment contract –> when goods delivered to carrier
2) if destination k –> when goods are tendered at the destination
UCC ROL: carrier case: shipment k: result
buyer bears ROL if goods damaged in transit
“FOB seller”
UCC ROL: carrier case: Destination k: result
seller bears ROL if goods damaged in transit
“FOB buyer”
FOB seller
shipment k (and so, buyer bears ROL in transit)
FOB buyer
destination k (and so, seller bears ROL in transit)
modification: CL rule
modification generally not ok, bc preexisting duty rule: promise to increase compensation for duties already owed is unenforceable bc no consideration for the modification
Modification (CL): preexisting duty rule
promise to increase compensation for duties already owed is unenforceable bc no consideration for the modification
modification (CL): exceptions
modification IS enforceable if:
1) mutual modification
2) unforeseen circs
modification (CL): excceptions: mutual modification: def
w changes on both sides (then you do have consideration)
modification (CL): exceptions: unforeseen circs: def
increased compensation is given bc performance is substantially more burdensome than reasonably anticipated (relaxation of CL rule)
modification (UCC):
agreement to modify existing k DNN consideration to be enforceable IF made in good faith
UCC vs. CL: modification
CL: usually no modification w/o consideration
UCC: dnn consideration for modification
result of faulty assumptions (mistake, impossibility, impracticability, frustration of purpose)
may excuse performance
mistake (def)
faulty assumption about present (at time of k-ing) material fact
unilateral mistake (rule)
1 party’s mistake re present material fact is NOT excuse (exception)
unilateral mistake: exception
if the other party knew or had reason to know of first party’s mistake, then first party’s performance excused
mutual mistake (rule)
k voidable (ie performance excused?) by disadvantaged part y if:
1) mistake assumption is re material facts
2) both parties made mistake
3) disadvantaged party did not bear the risk of mistake
mistake: example of not material term
value!
mistake: ways one party could bear the risk of the mistake
1) expressly delegated by k
2) circs: knew about the possible issue, etc.
mistake, impossibility, impracticability, frustration of purpose: UCC or CL?
both!
faulty assumptions re future facts: 3 kinds
1) impossibility
2) impracticability
3) frustration of purpose
impossibility (rule)
both parties excused if performance made impossible by events after k formed and:
1) impossibility = objective
2) contingency that created impossibility was unanticipated (not known to parties at time of making k)
impossibility: result
both parties excused from performance
impossibility: objective vs subjective: result
objective is one of the requirements. so if subjective, NO impossibility
impossibility: objective (def)
performance literally impossible for anyone, due to circs beyond control of the parties
impossibility: subjective (def)
performance becomes impossible bc of failure or fault of performing party (like not having $)
impossibility: objective: examples
1) specific subject matter of the k is destroyed
2) personal services k and person performing services died
3) supervening law has made performance illegal
impracticability: elements
Promisor MAY BE excused from performance if:
1) contingency causing impracticability was unforeseen AND
2) increased cost/burden of performance is FAR BEYOND what either party anticipated
impracticability: result
promisor MAY be excused from performance. note: extension of CL rule, courts still reluctant excuse nonperformance
impracticability: UCC exception
same rule EXCEPT: increased costs or even rise/collapse of market are viewed as business risks that k should’ve accounted for
impracticability: UCC exception: exs of things UCC still would consider impracticable
1) war/embargo
2) crop failure in whole area
3) natural disaster
impossibility, impracticability, frustration of purpose: exception
k can expressly allocate risks of these things, and then the cl/ucc analysis dn apply
frustration of purpose (def)
contingency occurs that dramatically reduces value of performance to receiving party
frustration of purpose (test)
performance can be excused if:
1) PRINCIPAL purpose of entering k is SUBSTANTIALLY frustrated
2) frustration is substantial in nature, not trivial
3) non-occurence of the event that caused the frustration was a basic assumption of the k
excusing performance by agreement of the parties: ways
1) rescission
2) accord + satisfaction
excusing/agreements: rescission (def)
1) only possible if both parties have remaining performance due
2) consideration bc each party discharges other’s duties (cancel each other out)
excusing/agreements: when to use each
rescission: both parties have remaining performance due
accord and satisfaction: one party has performed, other has not
excusing/agreements: accord (def)
accord: obligee promises to accept substituted performance (something different) in satisfaction of obligor’s duty
excusing/agreements: satisfaction (def)
actually fulfilling the accord
excusing/agreements: accord + satisfaction: rule
1) if performance by one party but not the other
2) can make accord to substitute performance
3) then must actually satisfy the accord
4) also need consideration
excusing/agreements: accord + satisfaction: result
accord + satisfaction = satisfies obligor’s original obligation
(if just accord, DOES NOT discharge obligor’s duty – just suspends it)
excusing/agreements: accord + satisfaction: what if accord, but no satisfaction?
DOES NOT discharge obligor’s duty – just suspends it
excusing/agreements: accord + satisfaction: examples of consideration
1) substituted performance differs significantly from orig performance
2) substituted performance: obligation is doubtful
3) partial payment: good faith doubt re amt owed
anticipatory repudiation: CL or UCC?
both!
anticipatory repudiation: kinds
1) party’s definitive statement: “I will breach”
2) party’s voluntary act that renders it unable to perform its k obligation
3) failure to give adequate assurance
anticipatory repudiation: failure to give adequate assurance: def
1) if reasonable grounds for insecurity, insecure party can make demand for adequate assurance of performance
2) other party fails to respond
anticipatory repudiation: failure to give adequate assurance: ways to fail to rp
1) dn rp at all w/in reasonable time
2) dn rp in way that provides reasonable assurances (dn address specific concern)
repudiation: RESULT
aggrieved party can:
1) cancel k, terminate all rights/obligations under it (ie be excused from its own performance)
2) sue for damages or specific performance
3) OR ignore repudiation, continue under k
is repudiation retractable?
yes, until it’s too late
repudiation: retraction: when is it too late?
if other party:
1) acts in reliance on repudiation OR
2) signals acceptance of repudiation to breaching party, OR
3) sues
conditions: def
k conditions obligation to perform on some event/action by other party. Obligation triggered when the conditioning event occurs.
conditions: CL: express condition: rule / result
any failure of express condition (less than 100% strict compliance) WILL DISCHARGE other party’s obligation to perform
conditions: CL: express condition: def
clear language (ex: on condition that, as long as, when, provided that, “payment is due upon completion”)
conditions: CL:express condition: exception
1) waiver
2) bad faith conduct
conditions: CL:express condition: exceptions: result
since exception, even tho there was an express condition that failed, doesn’t discharge performance obligation of party
conditions: CL:express condition: exception: waiver (def + note)
party who has been discharged from performing (bc of failed condition) can WAIVE right to discharge and perform anyway
note: some courts: mid-term modification –> need consideration
conditions: CL:express condition: exception: bad faith conduct: def
when party acts in bad-faith to prevent the condition, that party’s performance obligation will not be discharged
conditions: CL:express condition: exception: bad faith conduct: aka
“prevention doctrine”
conditions: CL: implied conditions: def
all ks contain implied conditions even if none stated (“you paint, I’ll pay.”) Courts treat breach like implied condition failing.
conditions: CL: implied conditions: 2 kinds
1) material breach
2) substantial performance
conditions: CL: implied conditions: material breach: def
serious enough breach
conditions: CL: implied conditions: material breach: result
court will treat like failure of an express condition. SO: aggrieved party is excused from his performance obligation
conditions: CL: implied conditions: substantial performance: result
aggrieved party will NOT be discharged of its own performance obligations
conditions: CL: implied conditions: substantial performance: def
breach is less serious, “close enough”
conditions: CL: workarounds for breaching party where condition fails: kinds
1) divisibility
2) quantum meruit
conditions: CL: workarounds for breaching party: divisibility (def)
k is divisible if easily apportioned into (pairs of) agreed equivalents (whole as sum of parts)
conditions: CL: workarounds for breaching party: divisibility (result)
only part of k has been materially breached, rest can continue
conditions: CL: workarounds for breaching party: quantum meruit (def)
if party failed to fulfill express condition or is in material breach, can still recover in quantum meruit
conditions: CL: workarounds for breaching party: quantum meruit: remedies
1) reasonable value of benefits conferred
2) reduced by damages caused by breach
substantial performance: UCC or CL?
CL only!
material breach: UCC or CL?
CL only!
conditions: UCC: perfect tender rule: def and note
seller is in breach if goods fail IN ANY RESPECT (even small) to conform to k
note: so every k term is like an express condition
conditions: UCC: perfect tender rule: buyer’s options if seller fails to make perfect tender:
1) reject the goods
2) accept the goods
3) accept part, reject part
conditions: UCC: perfect tender rule: buyer’s options after seller failure: reject the goods: reqs
1) reject w/in reasonable time AND
2) notify seller
effect of not rejecting properly = it’s an acceptance!
conditions: UCC: perfect tender rule: buyer’s options after seller failure: result
buyer can sue for damages (unless cure)
conditions: UCC: perfect tender rule: buyer’s options after seller failure: accept goods: ways to accept
1) reasonable time to accept +
2) signifies acceptance
conditions: UCC: perfect tender rule: buyer’s options after seller failure: accept goods: ways to signify acceptance
1) say goods conform to k
2) take goods, despite nonconformance
3) fail to effectively reject, OR
4) any action inconsistent w seller owning the goods
conditions: UCC: perfect tender rule: buyer’s options after seller failure: accept goods: result
1) buyer must pay k price
2) can seek damages for nonconformity (IF notifies seller)
conditions: UCC: perfect tender rule: buyer’s options after seller failure: accept goods: can buyer revoke acceptance?
yes, if:
1) noncomformity substantially impairs value of goods AND
a) buyer accepted bc unaware of nonconformity, OR 2) seller asserted cure but failed to cure
conditions: UCC: perfect tender rule: buyer’s options after seller failure: accept part and reject part: condition
can only work in commercial units (no half loaf of bread)
conditions: UCC: work-arounds for breaching sellers: options and time
1) right to cure (before k dl)
2) right to cure IF reasonable grounds to believe delivery was acceptable (after k dl)
conditions: UCC: work-arounds for breaching sellers: right to cure: elements
1) seller must give buyer reasonable notice of intent to cure AND
2) seller must make conforming delivery by k dl
conditions: UCC: work-arounds for breaching sellers: right to cure when reasonable grounds to believe delivery was acceptable: elements
1) belief (that acceptable) must be based on buyer’s express assurances OR trade usage, course of dealing, course of perofrmance
2) seller must give buyer reasonable notice of intent to cure
3) must make confomring delivery w/in reasonable time
conditions: UCC: perfect tender rule: exception
does NOT apply to installment ks!
UCC: installment k: def
k that contemplates delivery of goods in separate lots, to be separately accepted by the buyer
conditions: UCC: installment k rule re failure of conditions (and an exception)
buyer must give seller opportunity to cure any defects in installment delivery
UNLESS seller “substantially impairs” value of entire k
(NOT the perfect tender rule, it’s an exception!)
is the breach material? (factors)
1) aggrieved party deprived of benefit
2) can aggrieved party be adequately compensated by damages
3) forfeiture of aggrieved party
4) breach willful or in bad faith?
5) likelihood that breacher will cure in reasonable time
