Breach Flashcards
When does breach occur?
Found that (1) the promisor is under an absolute duty to perform, and (2) this absolute duty of performance has not been discharged, then this failure to perform in accordance with contractual terms will amount to a breach.
What is the next step after determining there is a breach of contract in a common law situation?
Determine whether that breach is material or minor.
In determining whether a breach is material or minor, courts look at:
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.
when is breach minor?
if the obligee gains the substantial benefit of their bargain despite the obligor’s defective performance. Does not relieve the aggrieved party of their duty of performance under the contract; merely gives a right to damages for the minor breach.
what is material breach?
If obligee does not receive the substantial benefit of their bargain. If breach material: nonbreaching (1) may treat contract as at an end and (2) immediate right to all remedies for breach of the entire K, including total damages.
minor breach coupled with anticipatory repudiation
the nonbreaching party may treat it as a material breach. UCC modifies this to permit a party to complete the manufacture of goods to avoid having to sell unfinished goods at the lower salvage value.
material breach of divisible contract
recovery is available for substantial performance of a divisible party even though there has been a material breach of the entire contract.
timeliness of performance
failure to perform by time stated in K is usually not a material breach if it happens within a reasonable time. However, if the nature of the K makes timely performance essential, or if the contract provides that time is of the essence, then failure to perform on time is usually a material breach.
Does Article 2 follow the perfect tender rule?
Yes. It generally doesn’t follow the common law substantial performance doctrine.
what is the perfect tender rule?
If goods or their delivery fail to conform to the K in any way, the buyer generally may reject all, accept all, or accept any commercial units and reject the rest.
when is right to reject under the perfect tender doctrine cut off?
Cut off by acceptance.
Under Article 2, buyer accepts when:
a. after a reasonable opportunity to inspect goods, they indicate to seller that the goods conform to requirements or they will keep 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
If the goods are in physical possession, the buyer must not treat the goods as if they own them.
If the seller gives no instructions within a reasonable time, the buyer may (1) reship the goods to seller, (2) store them for 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.
When can a buyer revoke their acceptance?
If the goods have a defect that substantially impairs their value to the buyer and:
- they accepted the goods on the reasonable belief that the defect would be cured and it has not been OR
- 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 K.
revocation of acceptance must occur:
(1) within a reasonable time after 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.
