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 in accordance with the contractual terms will amount to a breach to the contract.
The non-breaching party sues for breach of contract must show that they are willing and able to perform, but for the breaching parties failure to perform. 
Material or minor breach - common law - what makes a breach material
Once you have determined that there is a breach of contract, the next step in a common law contract situation is to determine whether the breach is material or minor. In determining whether a breaches, material or minor, courts look at:
The amount of benefit received by the non-breaching 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
The likelihood that the breaching party will perform the remainder of the contract. 
Material or minor breach - common law - effect of breaches - minor breach
A breach of contract is minor if the obligate gains the substantial benefit of their bargain, despite the obligors defective performance. A minor breach does not relieve the aggrieved party of their duty of performance under the contract. It merely gives them a right to damages for the minor breach.
Material or minor breach - common law - effect of breaches - material breach
If the obligee does not receive the substantial benefit of their bargain, the breach is considered material. If the breach is material, the non-breaching party one may treat the contract as add an end, that is any duty of counter performance owed by them will be discharged and two will have an immediate right to all remedies for breach of the entire contract, including total damages.
Material or minor breach - common law - effect of breaches - minor breach coupled with AR
If a minor breaches coupled with an anticipatory repudiation, the non-breaching party may treat it as a material breach. That is, they may sue immediately for total damages in our permanently discharged from any duty further performance. The courts hold the aggrieved party must not continue on, because to do so would be a failure to mitigate damages. The UC modifies this to permit a party to complete the manufacture of goods to avoid having to sell unfinished goods at the lower cost.
Material or minor breach - common law - effect of breaches - material breach of divisible contract
In a divisible contract, recovery is available for substantial performance of a divisible part, even though there has been a material breach of the entire contract. 
Material or minor breach - common law - timeliness of performance
Failure to perform by the time, stated in the contract is generally not a material breach if performance is rendered with a reasonable time. However, if the nature of the contract makes timely performance essential, or if the contract expressly provides that time is of the essence, then failure to perform on time is usually a material breach. Merely including a date for performance does not make time of the essence. Traditionally, any delay in performance of a contract with a time of the essence provision was a material breach, however, modern courts look at all the circumstances to determine whether performance on a specified date was vital important and whether the parties truly intended it to be so.
Perfect tender rule - right to reject cut off by acceptance
A buyer right to reject under the perfect tender doctor in generally is cut off by acceptance. Under article 2, a buyer accepts when:
After a reasonable opportunity to inspect the goods, they indicate to the seller that the goods can form to requirements or that they will keep the goods even though they failed to conform
They failed to reject within a reasonable time after tender or delivery of the goods or failed to seasonably notify the seller of the rejection
Or
They do any act inconsistent with the sellers ownership
Perfect tender rule - buyer’s responsibility for goods after rejection
After rejecting good and their physical possession, the buyer must not treat the good as if they own them. The buyer has an obligation to hold the goods with reasonable care at the sellers disposition for us times sufficient to permit the seller to remove them. If the seller has no agent or place of business within the market area, where the goods are rejected, a merchant buyer has a further obligation to obey any reasonable instructions as to the rejected goods.
If the seller gives no instructions within a reasonable time, the buyer may re-ship the goods to the seller, store them for the sellers account, or resell them for the sellers account in a public sale or private sale after giving the seller reasonable notice of the intent to resell. If the buyer resell the rejected goods, they are entitled to recover their expenses and a reasonable commission. If the buyer wrongfully exercises ownership over the rejected goods, the seller has an action against the buyer for conversion. 
Perfect tender rule - generally
Article 2, generally doesn’t follow the common law substantial performance doctrine. Instead, it follows the perfect tender role: if goods or their delivery failed to conform to the contract in anyway, the buyer generally may reject all, accept all, or accept any commercial units and reject the rest.
Perfect tender rule - buyer’s right to revoke acceptance - generally
Once goods are accepted, the buyers power to reject the goods generally is terminated, and the buyer is obligated to pay the price less any damages, resulting from the sellers breach. However, under limited situations, a buyer may revoke an acceptance already made. A proper revocation of acceptance has the effect of rejection.
Perfect tender rule - buyer’s right to revoke acceptance - when acceptance may be revoked
The buyer may 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 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 sellers assurance that the goods conformed to the contract
Revocation of acceptance must occur :
Within a reasonable time after the buyer discovers or should’ve discovered the defect
And
Before any substantial change in occurs that is not caused by a defect present at the time the seller relinquished possession
Perfect tender rule - exceptions to the perfect tender rule - seller’s right to cure - within time of performance
If the buyer has rejected goods because of defects, the seller may within the time originally provided for performance cure by giving reasonable notice of their intention to do so, and by making a new tender of conforming goods that the buyer must then accept
Perfect tender rule - exceptions to the perfect tender rule - seller’s right to cure - beyond original contract time
Ordinarily, the seller has no right to cure beyond the original contract time. However, if the buyer rejects a tender of nonconforming goods that the seller reasonably believed would be accepted 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.
The seller will probably be found to have had reasonable caused to believe that the tender would be acceptable if the seller can show that: 1) trade practices or prior dealing with the buyer led to the seller believing that the goods would be acceptable or 2) the seller could not have known of the defect despite proper business conduct, like they are packaged goods purchased from a supplier. 
Perfect tender rule - exceptions to the perfect tender rule - installment contracts
The right to reject when a contract is an installment contract is much more limited than in a single delivery contract situation. Installment contract rules are to the common law, substantial performance doctrine. And installment contract situation, and installment can be rejected only if the non-conformity substantially impairs the value of the installment and cannot be cured. In addition, the whole contract is breached only if the non-conformity substantially impairs the value of the entire contract.
