Breach Flashcards
A breach occurs when:
(1) A party to the contract is under an absolute duty to perform
(2) The duty to perform has not been discharged, and
(3) The party fails to perform in accordance with contractual terms
In determining whether a breach is material or minor, courts look at:
(1) The amount of benefit received by the nonbreaching party
(2) The adequacy of compensation for damages to the injured party
(3) The extent of part performance by the breaching party
(4) Hardship to the breaching party
(5) Negligent or willful behavior of the breaching party AND
(6) The likelihood that the breaching party will perform the remainder of the contract
A breach of contract is minor if:
The obligee gains the substantial benefit of their bargain despite the obligor’s defective performance.
What is the legal effect of a minor breach?
The nonbreaching party is NOT relieved of their duty of performance. A minor breach merely gives the nonbreaching party a right to damages for the minor breach.
A breach of contract is material if:
The obligee does NOT receive the substantial benefit of their bargain.
What is the legal effect of material breach?
The nonbreaching party:
(1) May treat the contract as at an end (i.e., any duty of counterperformance owed by them is discharged), and
(2) Will have an immediate right to all remedies for breach of the entire contract, including total damages
When will failure to perform a contract by the time stated be deemed a material breach?
Only when the nature of the contract makes timely performance essential, or if the contract expressly provides that time is of the essence.
Even if the contract expressly states that time is of the essence, courts will inquire into whether performance on or by some specified date was vitally important and whether the parties truly intended it to be so.
A buyer’s right to reject under the UCC’s perfect tender doctrine is cut off by _______.
acceptance
Under the UCC, a buyer accepts when:
(1) After a reasonable opportunity to inspect the goods, they indicate to the seller that the goods conform to requirements or that they will keep the goods even though they are nonconforming;
(2) They fail to reject within a reasonable time after tender or delivery of the goods or fail to seasonably notify the seller of their rejection; OR
(3) The do any act inconsistent with the seller’s ownership
Under the UCC, a buyer may revoke their acceptance if:
(1) The goods have a defect that substantially impairs their value to the buyer; AND
(2) They accepted the goods on the reasonable belief that the defect would be cured and it has not been, OR
(3) They accepted the goods because of the difficulty of discovering the defects or because of the seller’s assurance that the goods conformed to the contract
Under the UCC, revocation of acceptance must occur:
(1) Within a reasonable time after the buyer discovers or should have discovered the defects; AND
(2) Before any substantial change in the goods occurs that is not caused by a defect present at the time the seller relinquished possession
In a single delivery contract, if the buyer has reject goods because of defects, the seller may, within the time originally provided for performance:
“Cure” the defects by giving reasonable notice of their intention to do so and making a new tender of conforming goods that the buyer must then accept.
A seller may have a further reasonable time beyond the original contract time within which to cure defects if the seller can prove they had reasonable cause to believe that the tender would be acceptable by showing:
(1) Trade practices or prior dealings with the buyer led the seller to believe that the goods would be acceptable, or
(2) The seller could not have known of the defect despite proper business conduct
In an installment contract under the UCC, an installment can be rejected only if:
(1) The nonconformity substantially impairs the value of that installment AND
(2) The nonconformity cannot be cured
In an installment contract under the UCC, if an installment is rejected due to nonconformity, the whole contract is breached only if:
the nonconformity substantially impairs the value of the entire contract
