Breach Flashcards
When does a breach occur?
When party was (a) under absolute duty to perform and (b) duty has not been discharged, and they fail to perform.
What must nonbreaching party show in order to sue breaching party under K?
That they are willing and able to perform their part.
What factors do you look at to determine whether breach is material or minor? What is legal difference between both?
Factors:
- amount of benefit received by nonbreaching party
- adequacy of compensation for damages to injured party
- extent of part performance by breaching party
- hardship to breaching party
- negligent and willful behavoir by breaching party
- likelihood that breaching party will perform remainder of K
Minor - Breach is minor if party gains the substantial benefit of their bargain. Minor breach does not relieve other party from duty of performance, but they can get damages.
Material breach - Breach is material if they did not receive substantial benefit of the bargain. Nonbreaching party is excused from duties and can sue on entire K - right to all damages.
What is the legal effect of a minor breach + anticipatory repudiation?
nonbreaching party may treat it as material breach - i.e. no longer has duty to perform and sues immediately. Actually should NOT perform b/c that would be considered failure to mitigate damages.
What happens when a seller ships nonconforming goods (sale of goods)? What is considered acceptance of goods?
Perfect tender rule - buyer can reject, accept, or accept in part.
Acceptance = (a) indicate to seller goods conform or that they will keep them regardless (b) fail to reject within a reasonable time or fail to notify re rejection OR (c) act as if they own the goods
What is the buyer’s duty to the seller after rejection of goods?
Must hold the goods with reasonable care + obey reasonable instructions to deliver them back if seller doesnt have biz nearby.
If seller gives no instructions in reasonable time - buyer may reship goods to them, store them, or resell them for sellers account.
When may a buyer revoke their acceptance of goods?
When goods have a defect that substantially impairs their value AND either (a) they accepted the goods on the reasonable belief that the defect would be cured OR (b) accepted goods b/c of the difficulty of discovering the defects or b/c sellers assurances that goods conformed.
Revocation must occur (a) within reasonable time of discovering defect and (b) before any substantial changes to goods occurs.
What is the seller’s right to cure?
If buyer rejects defective goods, the seller may within the time originally provided fro performance cure the defects by giving reasonable notice of intention to do so and making a new tender of conforming goods to buyer. Buyer MUST accept.
Generally, has no right to cure BEYOND original K time, BUT they do if the seller reasonably believed the goods would be accepted despite a defect due to trade practices/prior dealings OR seller couldnt have known defect despite proper conduct.
Does seller have a right to cure in installment K’s?
An installment can only be rejected if the defect substantially impairs the value of installment AND cannot be cured. (So no perfect tender rule really)
Also, entire K will only be breached if nonconformity substantially impairs value of entire K.
