Breach Flashcards
What is Breach?
When the party has an absolute duty to perform, and does not perform or discharge the duty.
What are the two types of Breach?
Material (total) and Minor (partial)
What is a Material Breach?
A party has not received the substantial benefit of the contract.
What is a Minor Breach?
A party has received the substantial benefit of the contract.
What is the result of a Material Breach?
Non-breaching party may suspend performance and sue immediately.
What is the result of a Minor Breach?
Non-breaching party must perform his part of the obligations but may offset payment by the amount the Minor Breach caused.
What is Timeliness of Performance?
Failure to perform by the time stated
Is Timeliness of Performance a Material Breach?
No, as long as performance is rendered within a reasonable time.
What are the two conditions under which Timeliness of Performance is a Material Breach?
1) When both parties are aware that the nature of the contract makes timely performance essential 2) if the contract expressly states that “time is of the essence”.
What is the Perfect Tender Rule under the UCC?
Goods received must conform in every respect to what was ordered.
What three things may the buyer do under the Perfect Tender rule when the goods are non-conforming?
1) Reject the whole 2) Accept the whole 3) Accept any commercial units and reject the rest
What is a Seller’s Right to Cure?
Where the buyer has rejected non-conforming goods but the time for performance has not yet expired, the seller may notify the buyer of an intention to cure and the seller will then be allowed to cure within the contract time.
Under Seller’s Right to Cure, what if the buyer has rejected non-conforming goods that the seller reasonably believed would be acceptable?
The seller will have a further reasonable time to cure.
Under Acceptance and Rejection, what are the three conditions under which an Acceptance occurs?
The buyer 1) after a reasonable time to inspect, communicates to the seller that the goods are conforming or will take them in spite of nonconformity 2) fails to make an effective rejection 3) does any act inconsistent with seller’s ownership.
Under Acceptance and Rejection, what is a Rejection?
When the buyer notifies the seller that the goods are rejected.
What two elements are necessary under Rejection?
1) The buyer must reject the goods within a reasonable time after delivery or tender, and 2) the rejection must state with particularity the defect to justify the rejection.
When does a Rejection become effective?
When the buyer seasonably notifies the seller
What is a Buyer’s Right to Inspect?
Unless otherwise agreed, the buyer has a right before payment or acceptance to inspect all goods.
What is the one exception to a right of inspection before payment under a Buyer’s Right to Inspect?
If goods are delivered C.O.D
What is Payment By Buyer Before Inspection?
Whether by C.O.D or by the contract terms, payment before inspection does not constitute acceptance or impair the buyer’s right to inspect.
Under what two conditions is a Revocation of Acceptance effective?
A buyer may revoke acceptance of goods that substantially impair the value if 1) the buyer reasonably assumed the seller would cure non-conforming goods but the seller has not cured them, or 2) acceptance was because of the difficulty of discovery of nonconformity (or) by the seller’s assurances.
Under Revocation of Acceptance, how long does a buyer have to revoke acceptance?
A reasonable time after the buyer either 1) discovers the defect, or 2) should have discovered the defect.
When is Revocation of Acceptance effective?
When the buyer notifies the seller of the revocation
Does a revocation have the same legal effect as a rejection?
Yes
Within Risk of Loss and Delivery Terms, what Is F.O.B.?
FREE ON BOARD. The seller is required, at the seller’s risk and expense, to transport the goods to the destination following the F.O.B. designation.
Within Risk of Loss and Delivery Terms, what Is F.A.S.?
FREE ALONGSIDE. The seller is required, at the seller’s risk and expense, to transport the goods to the vessel or dock at the named port following the F.A.S. designation.
Within Risk of Loss and Delivery Terms, what Is C.I.F.?
COST OF THE GOODS, INSURANCE, AND FREIGHT. The seller is required, at the seller’s risk and expense, to transport the goods to the destination following the C.I.F. designation and to insure the goods. Also, the price salted before the C.I.F. designation is the lump sum for the cost of the goods, the insurance, and the freight.
Within Risk of Loss and Delivery Terms, what Is C.&F.?
COST OF GOODS AND FREIGHT. The seller is required, at the seller’s risk and expense, to transport the goods to the destination following the C.&F. designation. The price stated before the C.&F. designation is the lump sum cost of the goods and the freight.
Within Risk of Loss, what is a Carrier Case?
In no particular destination is stated, risk of loss passes from the seller to the buyer (when the goods are delivered to the carrier under a shipment contract).
Under Risk of Loss and Carrier Case, what if there is a stated destination?
Then the risk of loss will pass from the seller to the buyer when the goods are tendered to the buyer (Delivery contract).
What is Substitute Performance?
When, without fault of either party, the delivery method agreed upon becomes commercially impracticable, a reasonable substitute performance must be tendered and accepted.
Under Risk of Loss - Non-Carrier Case, if the seller is a merchant, when does the risk of loss pass from the seller to the buyer?
At the actual time of delivery
Under risk of Loss - Non-Carrier Case, if the seller is a non-merchant, when does the risk of loss pass from the seller to the buyer?
On tender of delivery
Under Sale on Approval contract, how long does the risk of loss remain with the seller?
Until acceptance. Then the return is also at the seller’s risk and expense.
Under Sale or Return contract, how long does the risk of loss remain with the seller?
It does not. It is transferred to the buyer. And the return is at the buyer’s risk and expense as well.
What is a Loss To Goods Identified at the Time of Contract Formation?
Where the goods suffer loss through no fault of either party (and risk has not passed to the buyer).
Under Loss To Goods Identified at the Time of Contract Formation, what if the loss is total?
The contract is avoided and the obligations are discharged
Under Loss To Goods Identified at the Time of Contract Formation, what if the loss is partial?
The buyer can inspect and then (at the buyer’s option) either 1) treat the contract as avoided, or 2) accept some (or all) of the goods with a set-off for deficiency in quantity.
Under a Risk of Loss Where Breach is Present, where the tender or delivery by seller fails to conform as to give the buyer the right of rejection, where does the risk of loss remain?
With the seller until cure or acceptance
Under a Risk of Loss Where Breach is Present, where the buyer rightfully revokes acceptance, how may the buyer treat the risk of loss?
As having rested with the seller from the beginning (only to the extent of any deficiency in buyer’s insurance).
Under a Risk of Loss Where Breach is Present, where the buyer is in breach before risk of loss has passed to the buyer, how may the seller treat the risk of loss?
As having rested with buyer for a commercially reasonable time (only to the extent of any deficiency in seller’s insurance).
