Breach Flashcards
When does a breach occur?
If it is 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 will amount to a breach of the contract.
The nonbreaching party must show that they are willing and able to perform but for the breaching party’s failure to perform
What will courts consider in determining whether a breach is material or minor?
- The amount of benefit received by the nonbreaching party
- The adequacy of compensation for damages to the injured party
- The extent of part performance by the breaching party
- Hardship to the breaching party
- Negligent or willful behavior of the breaching party AND
- The likelihood that the breaching party will perform the remainder of the contract
Effect of Minor Breach
A minor breach (obligee gains substantial benefit of the bargain despite obligor’s defective performance) will not relieve the aggrieved party of their duty of performance, but gives them a right to damages for the minor breach
Effect of Material Breach
If the obligee does not receive the substantial benefit of their bargain, the breach is considered material.
The nonbreaching party may (1) treat the contract as at an end and (2) will have an immediate right to all remedies for breach of the entire contract, including total damages
Timeliness of Performance
Failure to perform by the time stated in the contract is generally not a material breach if performance is rendered within a reasonable time
Perfect Tender Rule: Sale of Goods
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
Perfect Tender: Right to Reject Cut Off By Acceptance
A buyer’s right to reject under the PTD generally is cut off by acceptance. Under Article II, a buyer accepts when:
- After a reasonable opportunity to inspect the goods, they indicate to the seller that the goods conform to requirements/they will keep the goods even though they fail to conform
- 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
- They do any act inconsistent with the seller’s ownership
Buyer’s Responsibility for Goods after Rejection
After rejecting goods in their 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:
- reship the goods to the seller
- store them for the seller’s account or
- resell them for the seller’s account in a public sale or private sale after giving the seller reasonable notice of the intent to resell
Buyer’s Right to Revoke Acceptance
Acceptance may be revoked if the goods have a defect that substantially impairs their value to the buyer AND:
- they accepted the goods on the reasonable belief 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 contract
When must revocation of acceptance occur?
Within a reasonable time after the buyer discovers or should have discovered the defects AND before any substantial change in the goods occurs that is not caused by a defect present at the time the seller relinquished possession
Exceptions to the Perfect Tender Rule
- Seller’s Right to Cure: seller can cure by notice and new tender within time for performance. If the buyer, however, rejects a tender of nonconforming goods that the seller reasonably believed wuld be acceptance, the seller upon reasonable notification to buyer has a further reasonable time to make a conforming tender
- Installment Contracts: the right to reject is more limited than a single delivery contract. AN installment can be rejected only if the noncomformity substantially impairs the value of that installment and cannot be cured
