Breach of Contract Flashcards
What is the Restatement rule of breach?
“When performance of a duty under a contract is due, any
nonperformance is a breach.”
What are the three types of breach?
Partial Breach, Material Breach, Total Breach
When does partial breach occur and what is the test?
Partial Breach: Occurs when there are only small deficiencies in the quantity or quality of performance where precision is not critical.
Test for Partial Breach:
Materiality Test
Consequences:
* No right to suspend or
terminate (i.e.
non-breaching party
must still perform its
obligations)
* Right to damages
(non-breaching party
can recover money
damages for any harm
caused by the partial
breach)
What is material breach and what is the test?
Material Breach: Occurs when a party
has not substantially performed.
Test for Material Breach:
Materiality Test
Consequences:
* Gives the non-breaching party the right to suspend performance, entitling breaching party an opportunity to cure the breach.
* If the non-breaching party terminates the contract without giving the breaching party an opportunity to cure, a court may find that the non-breaching party committed a total breach.
* If the material breach remains uncured, then it becomes a total breach and the non-breaching party may terminate the contract.
What other factors should you consider with material breach?
Curing the Breach: Must, at a minimum, transform a
material breach into a partial breach.
Timetable for Curing the Breach: A reasonable time
Time is of the Essence Clause:
States that a party will be in total breach if performance does not occur by a certain date at a certain time. Such clauses are not always enforced, particularly if they are boilerplate.
What is total breach?
Total Breach: Occurs when a material breach is not cured
Consequences: If the breaching party will not cure its breach, then the non-breaching party may: (1) withhold performance, (2) terminate the contract, (3) sue for damages.
For breach, what is the materiality test?
The Restatement factors can be summarized as follows:
- Amount of benefit received
- Adequacy of damages
- Forfeiture suffered by breaching party
- Likelihood of cure
- Lack of good faith and fair dealing
Do you need all of them for a factor-based test? No. How many do you need? Unclear. 3/5, maybe it depends, will need to discuss.
How can a parties’ duties be discharged?
- Full Performance: Complete and total performance
discharges a contractual duty.
● Tender of Performance That Is Rejected: If one party
tenders their performance, but it is rejected by the other
party, then the duty of the tendering party is discharged.
● Agreement by the Parties: A mutual agreement to terminate a contract where both parties’ duties remain executory would discharge contractual duties, as would other types of agreements such as a novation, contract modification, or accord and satisfaction.
● Valid Defense or Excuse: If a party can prove a defense or
excuse, then that party’s duties are discharged or reformed.
● Occurrence of a Condition: The occurrence of a condition
specified in the contract may discharge a contractual duty.
● Total Breach by the Other Party: If one party totally
breaches a contract, then the non-breaching party may
justifiably terminate the contract.
What are the UCC Nonperformance Rules?
General Comparison: The UCC takes a significantly
different approach to breach, permitting a buyer to reject
any deviation so long as the rejection is done in good faith.
How can a seller breach under the UCC?
Types of Breach: (1) non-delivery, (2) failure to make perfect tender, (3) breach of warranty, and (4) anticipatory repudiation.
Under the UCC, what is the perfect tender rule?
if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may:
(a) reject the whole; or (b) accept the whole; or (c) accept any commercial unit or units and reject the rest.” — UCC §2-601 Buyer’s Rights on Improper Delivery
“Perfect”: Goods must conform completely to the terms of the contract
What is an exception to the perfect tender rule?
Installment contract: “One [contract] which requires or authorizes the delivery of goods in separate lots to be separately accepted.” — UCC §2-612(1)
Rules for Installment Contracts:
* The buyer can only reject an
installment “if the non-conformity
substantially impairs the value of that
installment” AND the non-conformity
cannot be cured by the seller.
* The buyer is only afforded the right to
cancel the entire installment contract
if “one or more of the non-conforming
installments substantially impairs the
value of the whole contract.
How can a buyer breach under the UCC?
Types of Breach: (1) wrongful rejection of goods, (2) failure to make payment, and (3) anticipatory repudiation
