breach Flashcards
is there a breach?
(1) the promisor is under an absolute duty to perform - substantial performance, AND
(2) this absolute duty of performance has not been discharged
= breach
The nonbreaching party who sues for breach of contract must show that they are willing and able to perform but for the breaching party’s failure to perform.
common law breach types and effects
MINOR BREACH
A breach of contract is minor if the obligee gains the substantial benefit of their bargain despite the obligor’s defective performance.
EFFECT: does not relieve the aggrieved party of their duty of performance under the contract; it merely gives them a right to damages (setoff) for the minor breach.
MATERIAL BREACH
If the obligee does not receive the substantial benefit of their bargain, the breach is considered material OR if there is the absence of substantial performance
EFFECT: nonbreaching party (1) may treat the contract as at an end; that is, any duty of counterperformance owed by them will be discharged, and (2) will have an immediate right to all remedies for breach of the entire contract, including total damages.
breach analysis
(1) is there a breach
(2) is it common law or UCC
(3) determine whether there is breach under the correct type
factors for determining whether there has been substantial performance [or, whether there has been material breach]
a. The amount of benefit received by the nonbreaching party
b. The adequacy of compensation for damages to the injured
party
c. The extent of part performance by the breaching party
d. Hardship to the breaching party
e. Negligent or willful behavior of the breaching party
AND
f. The likelihood that the breaching party will perform the remainder of the contract
where significance of default is greivously out of proportion to the failure of performance [jacobs v. Kent] the breach will be minor
willful breach = more likely to be found material
if breach can be cured = not material breach
effect of material breach of divisible contract (CL)
recovery is available for substantial perfor- mance of a divisible part even though there has been a material breach of the entire contract.
to what extent is failure to perform by time stated in the contract a material breach?
really only a material breach when there is a “time is of the essence” clause or the K is of a nature that timely performance is essential
otherwise, it is not a material breach as long as done in a reasonable time – judges will look at all of the circumstances surrounding the failure to perform on time
including dates of performance does not make time of the essence
what is the perfect tender rule
if goods or their delivery fail to conform to the contract in any way, the buyer generally may reject all, accept all, or accept any commercial units and reject the rest.
what cuts off buyer’s right to reject after no perfect tender?
A buyer’s right to reject under the perfect tender doctrine generally is cut off by acceptance. Under Article 2, a buyer accepts when:
a. 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 fail to conform;
b. 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
c. They do any act inconsistent with the seller’s ownership.
buyer’s responsibility for goods after rejection
DO NOT TREAT GOODS AS IF YOU OWN THEM
hold them with reasonable care for reasonable time to allow seller to remove them and put them where seller asks them to
if seller gives no instructions:
may (1) reship the goods to the seller, (2) store them for the seller’s account, or (3) resell them for the seller’s account in a public sale (or a private sale after giving the seller reasonable notice of the intent to resell).
does buyer have right to revoke acceptance after receiving goods?
GENERAL RULE
Once goods are accepted, the buyer’s power to reject the goods generally is terminated and the buyer is obligated to pay the price less any damages resulting from the seller’s breach
EXCEPTIONS
Buyer may revoke their acceptance if the goods have a defect that substantially impairs their value to the buyer AND
[a] They accepted the goods on the reasonable belief that the defect would be cured and it has not been
OR
[b] 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.
if buyer can revoke acceptance of goods received, when does it have to occur?
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.
what are the exceptions to the perfect tender rule
SINGLE DELIVERY CONTRACTS re: SELLER’S RIGHT TO CURE
[a] seller’s right to cure within performance time
seller can cure within the time originally provided for performance by providing reasonable notice to buyer of intention to cure defect and making a new tender of conforming goods [that buyer must then accept]
[b] seller’s right to cure beyond performance time for limited situations
If the buyer rejects a tender of noncon- forming goods that the seller reasonably believed would be acceptable “with or without money allowance,” the seller, upon a reasonable notification to the buyer, has a further reasonable time beyond the original contract time within which to make a conforming tender.
reasonable cause to believe that the tender would be acceptable might be –> (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 (for example, packaged goods purchased from a supplier).
[c] shipment as accommodation
if shipment of nonconforming goods is an accommodation, this is a counteroffer which buyer may accept or reject; if buyer rejects, then no K, but if buyer accepts, then yes K.
INSTALLMENT CONTRACTS re: DIFFERENT PERFORMANCE STANDARD
An installment can be rejected only if the nonconformity substantially impairs the value of that installment and cannot be cured.
In addition, the whole contract is breached only if the nonconformity substantially impairs the value of the entire contract.
other types of breaches
anticipatory repudiation can be treated as an immediate breach of contract.
Failure to live up to warranties constitutes a breach of warranty, for which a remedy is available.
what can buyer do after seller makes an anticipatory repudiation?
terminate the K and make a new K to complete the job the seller could not do
buyer could also do nothing
buyer does not have to give seller notice to exercise this right
anticipatory repudiation can occur by what means?
any means (written or oral)
