Chapter 10. Performance And Non-Performance (231- 260)

Question 1

A, a shipowner, promises to carry B’s cargo on his ship. B promises to pay A the stipulated freight. They exchange these promises in the expectation that there will be a subsequent exchange of those performances. A fails to carry B’s cargo, and B thereupon refuses to pay the freight. Does A have a claim against B?

Answer 1

A’s carrying the cargo and B’s paying the freight are to be exchanged under the exchange of promises. Therefore, under the rule stated in § 237, A has no claim against B. Restatement 2d of Contracts § 231(b)

Question 2

In return for A’s promise to deliver a machine, B promises to pay A $10,000 within 30 days. They exchange these promises in the expectation that there will be a subsequent exchange of those performances. A fails to deliver the machine, and B thereupon refuses to pay any part of the $10,000. Does A have a claim against B?

Answer 2

A’s delivery of the machine and B’s payment of the $10,000 are to be exchanged under the exchange of promises. Therefore, under the rule stated in § 237, A has no claim against B. Restatement 2d of Contracts § 231(b)

Question 3

In return for A’s promise to deliver a machine priced at $10,000, B pays A $5,000 as a down payment and promises to pay A the $5,000 balance within 30 days after delivery of the machine. They exchange these promises in the expectation that delivery of the machine will be exchanged, at least in part, for the $5,000 balance and that the $5,000 balance will be exchanged for the machine. A fails to deliver the machine, and B thereupon refuses to pay the $5,000 balance. Does A have a claim against B? B against A?

Answer 3

A’s delivery of the machine and B’s payment of the $5,000 balance within 30 days are to be exchanged under the exchange of promises. Therefore, under the rule stated in § 237, A has no claim against B. B is entitled to restitution of the $5,000 he paid (see §§ 370-77) in addition to his claim against A for damages for breach (§ 243). Restatement 2d of Contracts § 231(c)

Question 4

A promises to sell and B to buy a food freezer priced at $1,200 to be paid for in monthly installments over an eighteen-month period. A also promises to sell B frozen food at greatly reduced prices, and B promises to buy an initial quantity, deliverable at the same time as the freezer, for $200, with additional quantities to be available in the future at B’s option. Although two separate writings are executed, one entitled “Freezer Contract” and, the other, entitled “Food Contract,” the promises are made as part of the same bargain, and payment for the freezer, for example, is to be exchanged at least in part for the delivery of the food. A tenders the freezer but fails to supply the food although B tenders the $200. B thereupon refuses to take the freezer or to pay anything. Does A have a claim against B?

Answer 4

The performances promised in the two writings, A’s delivery of the freezer and the food and B’s payment for the freezer and the food, are to be exchanged under a single exchange of promises. Therefore, under the rule stated in § 238, A has no claim against B. Restatement 2d of Contracts § 231(d)

Question 5

A, the owner of a small publishing business, makes a written contract with B, a large publishing company, to sell A’s business to B in exchange for 10,000 shares of B’s stock, having a market price equal to the fair value of A’s business. At the same time, A and B execute a separate writing under which A is to work for B for 5 years, subject to renewal at B’s option, at a salary of $30,000 a year plus a bonus based on sales. B unjustifiably discharges A after one month, and A thereupon refuses to complete the transfer of his business to B. Does A have a claim against B? B against A? What might a court determine?

Answer 5

Whether or not A’s refusal to complete the exchange is a breach depends on whether, under the bargain of the parties, there are two contracts or only one contract. If the court determines that the promise of A to work for B is no part of the consideration for B’s promise to buy A’s business, and that the promise of B to employ A is no part of the consideration for A’s promise to sell his business, there are two separate exchanges of promises. The performance promised in the one writing and the performance promised in the other cannot then be performances to be exchanged under a single exchange of promises. B then has a claim against A for damages for breach of the contract to sell A’s business to B, and A has a claim against B for damages for breach of the contract to employ A (§ 243). If, however, the court determines that each of the promises is at least part of the consideration for the other, there is only one exchange of promises. Under the rule stated in § 232 all of the performances of each party taken collectively are treated as performances to be exchanged under that exchange of promises. Under the rule stated in § 238, B then has no claim against A for damages for A’s refusal to complete the transfer of his business to B, but A has a claim against B for damages because of his unjustifiable discharge of A (§ 243). Restatement 2d of Contracts § 231(d)

Question 6

A, a wholesaler, promises to sell and B, a retailer, promises to buy goods together with related advertising material, payment to be made within 30 days of delivery. A also promises not to sell similar advertising material to any other retailer in B’s city. A sells similar advertising material to another retailer in B’s city, and B thereupon refuses to take or pay for the goods. Does A have a claim against B?

Answer 6

A’s selling B goods together with advertising material and not selling others similar advertising material, taken collectively, and B’s payment are to be exchanged under the exchange of promises. Therefore, under the rule stated in § 237, if A’s failure of performance is material, A has no claim against B. Restatement 2d of Contracts § 232(a)

Question 7

A promises to sell to B a lot in a subdivision for $8,000. B promises to pay in four annual installments of $2,000 each, beginning one year after execution of the contract. A promises to begin to make improvements and pave the streets within 60 days and to complete work within a reasonable time and promises to deliver a deed at the time of the final payment. A fails to pave the streets, and B thereupon refuses to pay any installments. Does A have a claim against B?

Answer 7

A’s making improvements, paving streets, and delivering a deed, taken collectively, and B’s paying installments are to be exchanged under the exchange of promises. Therefore, under the rule stated in § 237, if A’s failure of performance is material, A has no claim against B. Restatement 2d of Contracts § 232(a)

Question 8

A employs B under a five-year employment contract, which contains a valid covenant under which B promises not to engage in the same business in a designated area for two years after the termination of the employment. It expressly provides that “this covenant is independent of any other provision in this agreement.” After B has begun work, A unjustifiably discharges him, and B thereupon engages in business in violation of the covenant. What would a court need to determine for A to have a claim against B?

Answer 8

A’s employing B and B’s working for A are to be exchanged under the exchange of promises. The quoted words indicate an intention that A’s employing B is not to be exchanged for B’s refraining from engaging in the same business. If the court concludes that this intention is clearly manifested, A has a claim against B for damages for breach of his promise not to compete. Restatement 2d of Contracts § 232(a)

Question 9

A contracts to sell and B to buy a machine, to be delivered immediately, for $10,000. As part of the same bargain, B gives A his negotiable promissory note for $10,000 to A’s order, payable in 90 days, but the note makes no reference to the transaction out of which it arises. A fails to deliver the machine. Does A have a claim against B?

Answer 9

A’s delivering the machine and B’s paying the note are to be exchanged under the exchange of promises. Therefore, under the rule stated in § 237, A has no claim on the note or the contract against B. See Uniform Commercial Code §§ 3-306, 3-408, and 3-307(3). Restatement 2d of Contracts § 232(a)

Question 10

A, an insurance company, issues to B a group health insurance policy covering B’s employees for one year beginning January 1 in return for B’s promise to pay the premium on February 1. During the month of January A unjustifiably rejects proper claims filed by B’s employees under the policy. B refuses to pay the premium on February 1. Does A have a claim against B? Why?

Answer 10

A’s paying proper claims of B’s employees and B’s paying the premium are to be exchanged under the exchange of promises. Therefore, under the rule stated in § 237, if A’s breach is material, A has no claim against B. Restatement 2d of Contracts § 232(c)

Question 11

A contracts to sell and B to buy ten identical carloads of coal for $100,000. Assuming no additional terms, is the delivery of the ten carloads divisible?

Answer 11

Delivery by A of all ten carloads is due in a single lot. Restatement 2d of Contracts § 233(a)

Question 12

A contracts to sell and B to buy ten identical carloads of coal for $100,000. It is known by both A and B that only one carload of coal will be available at a time. Assuming no additional terms, is the delivery of the ten carloads divisible?

Answer 12

A may deliver one carload at a time. Restatement 2d of Contracts § 233(a)

Question 13

A contracts to sell and B to buy ten identical carloads of coal for $100,000. It is known by both A and B that only one carload of coal will be available at a time. Assuming no additional terms, is the payment for each of the ten carloads divisible?

Answer 13

Payment of $10,000 by B is due at the same time that A delivers each carload of coal. Restatement 2d of Contracts § 233(b)

Question 14

A promises to sell land to B, delivery of the deed to be on July 1. B promises to pay A $50,000, payment to be made on July 1. Assuming no additional terms, when is the delivery of the deed and payment of the price due?

Answer 14

Delivery of the deed and payment of the price are due simultaneously. Restatement 2d of Contracts § 234(b)

Question 15

A promises to sell land to B, the deed to be delivered on July 1. B promises to pay A $50,000, no provision being made for the time of payment. Assuming no additional terms, when must performance of the delivery of the deed and payment of the price occur?

Answer 15

Delivery of the deed and payment of the price are due simultaneously. Restatement 2d of Contracts § 234(b)

Question 16

A promises to sell land to B and B promises to pay A $50,000, no provision being made for the time either of delivery of the deed or of payment. Assuming no additional terms, when is the delivery of the deed and payment of the price due?

Answer 16

Delivery of the deed and payment of the price are due simultaneously. Restatement 2d of Contracts § 234(b)

Question 17

A promises to sell land to B, delivery of the deed to be on or before July 1. B promises to pay A $50,000, payment to be on or before July 1. Assuming no additional terms, when is the delivery of the deed and payment of the price due?

Answer 17

Delivery of the deed and payment of the price are due simultaneously. Restatement 2d of Contracts § 234(b)

Question 18

A promises to sell land to B, delivery of the deed to be on or before July 1. B promises to pay A $50,000, payment to be on or before August 1. Assuming no additional terms, when is the delivery of the deed and payment of the price due?

Answer 18

Delivery of the deed and payment of the prices are not due simultaneously. Restatement 2d of Contracts § 234(b)

Question 19

A promises to sell land to B, delivery of the deed to be four years from the following July 1. B promises to pay A $50,000 in installments of $10,000 on each July 1 for five years. Assuming no additional terms, when is the delivery of the deed and payment of the last installment due?

Answer 19

Delivery of the deed and payment of the last installment are due simultaneously. Restatement 2d of Contracts § 234(c)

Question 20

A promises to sell land to B, delivery of the deed to be one year from July 1. B promises to pay A $50,000 in installments of $10,000 on each July 1 for five years. Assuming no additional terms, when is the delivery of the deed and payment of the second installment due?

Answer 20

Delivery of the deed and payment of the second installment are due simultaneously. Restatement 2d of Contracts § 234(c)

Question 21

A promises to sell land to B, delivery of the deed to be four years from the following July 1. B promises to pay A $50,000 in installments of $10,000 on each July 1 for five years. B duly pays the first three installments, but unjustifiably does not pay the fourth until the fifth is due. Is there a breach? When will the delivery of the deed and payment of the forth and fifth installments due?

Answer 21

If B’s failure to pay the fourth installment discharges A’s remaining duties of performance under the rule stated in § 237, A has a claim for damages for total breach (§ 243(1)), and no further performance is due from either party. Otherwise B’s failure to pay the fourth installment gives rise to only a claim for damages for partial breach because of the delay, and, unless circumstances make it appropriate for A to require B to pay the fourth installment first, delivery of the deed and payment of the fourth and fifth installments are then due simultaneously. Restatement 2d of Contracts § 234(d)

Question 22

A contracts to do the concrete work on a building being constructed by B for $10 a cubic yard. When is payment by B due?

Answer 22

In the absence of language or circumstances indicating the contrary, payment by B is not due until A has finished the concrete work. Restatement 2d of Contracts § 234(f)

Question 23

A contracts to do the concrete work on a building being constructed by B for $10 a cubic yard. B promises to furnish a bond to secure his payment. No provision is made as to the time for furnishing the bond. When is performance by A due?

Answer 23

No performance by A is due until B has furnished the bond. Although the doing of the concrete work by A requires a period of time and the furnishing of the bond by B does not, the circumstance that the bond is required to secure payment by B indicates that B must furnish the bond first. Restatement 2d of Contracts § 234(f)

Question 24

A contracts to make alterations in B’s home for $5,000. $500 is to be paid on the signing of the contract, $1,500 on the starting of work, $2,000 on the completion of rough carpentry and rough plumbing, and $1,000 on the completion of the job. When is payment by B due?

Answer 24

Payment by B is due as the work progresses according to the terms of the contract. Restatement 2d of Contracts § 234(f)

Question 25

A promises to sell land to B, in return for which B promises to pay A $10,000 a year for five years on July 1 of each year. No provision is made as to the time for delivery of a deed. When is delivery of the deed and payment of the last installment due?

Answer 25

Delivery of a deed is not due until July 1 of the fifth year, at which time delivery of the deed and payment of the last installment are due simultaneously. See Illustration 6 of § 234. Rst. 234(f)

Question 26

A contracts to build a house for B for $50,000 according to specifications furnished by B. A builds the house according to the specifications. Does A have a duty?

Answer 26

A’s duty to build the house is discharged. Restatement 2d of Contracts § 235(a)

Question 27

A contracts to build a house for B for $50,000 according to specifications furnished by B. A builds the house according to the specifications. A builds the house according to the specifications except for an inadvertent variation in kitchen fixtures which can easily be remedied for $100. Has the contract been breached?

Answer 27

A’s non-performance is a breach. Restatement 2d of Contracts § 235(b)

Question 28

A contracts with B to manufacture and deliver 100,000 plastic containers for a price of $100,000. The colors of the containers are to be selected by B from among those specified in the contract. B delays in making his selection for an unreasonable time, holding up their manufacture and causing A loss. Has the contract been breached?

Answer 28

B’s delay is a breach. His duty of good faith and fair dealing (§ 205) includes a duty to make his selection within a reasonable time. Restatement 2d of Contracts § 235(b)

Question 29

A contracts with B to repair B’s building for $20,000, payment to be made “on the satisfaction of C, B’s architect, and the issuance of his certificate.” A makes the repairs but does not ask C for his certificate. B does not pay A. Has the contract been breached?

Answer 29

B’s non-performance is not a breach. It is justified on the ground that performance is not due because of the non-occurrence of a condition. See Illustration 5 to § 227. Restatement 2d of Contracts § 235(b)

Question 30

A and B make an oral contract, unenforceable under the Statute of Frauds (§ 125), by which A promises to sell and B to buy land for $50,000. Although B tenders the money, A fails to tender a deed and later writes a letter to B which satisfies the Statute of Frauds. Has the contract been breached?

Answer 30

A’s non-performance is a breach and gives rise to a claim for damages, even though the claim is unenforceable until A writes the letter. See Illustration 4 to § 133. Restatement 2d of Contracts § 235(c)

Question 31

A contracts with B to build a building on B’s land, work to commence on May 1 and to be completed by October 1. On May 10, A has not yet commenced work. What claim, if any, might B have against A? Why?

Answer 31

If the court concludes that A’s breach, although material (§ 241), has not continued for such a length of time that B is discharged (§ 242), B has a claim against A for damages caused by the delay, but this is not a claim for damages based on all of B’s remaining rights to performance. B’s claim is one for damages for partial breach. See § 243. Restatement 2d of Contracts § 236(b)

Question 32

A contracts with B to build a building on B’s land, work to commence on May 1 and to be completed by October 1. On May 10, A has not yet commenced work. B cancels the contract. What claim, if any, might B have against A? Why?

Answer 32

If the court concludes that A’s breach is not only material but has continued for such a length of time that B is discharged (§ 242), B has a claim against A for damages based on all of his remaining rights to performance. B’s claim is one for damages for total breach. See § 243. Restatement 2d of Contracts § 236(b)

Question 33

A contracts to build a house for B for $50,000, progress payments to be made monthly in an amount equal to 85% of the price of the work performed during the preceding month, the balance to be paid on the architect’s certificate of satisfactory completion of the house. Without justification B fails to make a $5,000 progress payment. A thereupon stops work on the house and a week goes by. What claim, if any, might B have against A? A against B? Why?

Answer 33

A’s failure to continue the work is not a breach and B has no claim against A. B’s failure to make the progress payment is an uncured material failure of performance which operates as the non-occurrence of a condition of A’s remaining duties of performance under the exchange. If B offers to make the delayed payment and in all the circumstances it is not too late to cure the material breach, A’s duties to continue the work are not discharged. A has a claim against B for damages for partial breach because of the delay. Restatement 2d of Contracts § 237(a)

Question 34

A contracts to build a house for B for $50,000, progress payments to be made monthly in an amount equal to 85% of the price of the work performed during the preceding month, the balance to be paid on the architect’s certificate of satisfactory completion of the house. B fails to make the progress payment or to give any explanation or assurances for one month. What claim does A have against B? How might B avoid this?

Answer 34

If, in all the circumstances, it is now too late for B to cure his material failure of performance by making the delayed payment, A’s duties to continue the work are discharged. Because B’s failure to make the progress payment was a breach, A also has a claim against B for total breach of contract (§ 243). Restatement 2d of Contracts § 237(a)

Question 35

A, a theater manager, contracts with B, an actress, for performance by her for a period of six months in a play that A is about to present. B dies during the first week of the performance. What claim, if any, might A have against B’s estate? Why?

Answer 35

A’s remaining duties with respect to the exchange of performances are discharged by B’s uncured material failure of performance. Because B’s failure is justified on the ground of impossibility (§ 262), A has no claim against B’s estate. Restatement 2d of Contracts § 237(a)

Question 36

A contracts to sell and B to buy at a stated price four parcels of land which A does not own but which the parties expect A to acquire by purchase at a foreclosure sale. A bids on the four parcels at the foreclosure sale, but each time B bids against him and acquires all four for less than the contract price. A does not convey the four parcels to B. What claim, if any, might B have against A? Why?

Answer 36

B has no claim against A. B’s bidding at the sale was a material breach of his duty of good faith and fair dealing (§ 205), which operated as the non-occurrence of a condition of A’s duties and discharged them. Restatement 2d of Contracts § 237(b)

Question 37

A, a contractor, and B, a subcontractor, make a contract under which B promises to install sewer pipe in a trench which A is to dig and maintain during installation. A unjustifiably so fails to maintain the trench that it fills with water, severely hindering installation. B thereupon stops work and refuses to continue unless the breach is cured. A does not cure his breach. What claim, if any, might A have against B? What will this depend on?

Answer 37

If A’s breach is material (§ 241), it operates as the non-occurrence of a condition of B’s duty to build the sewer, discharging it, and A has no claim against B. If A’s breach is not material, B’s duties are not discharged, and B’s stopping work and refusing to continue is a breach. Restatement 2d of Contracts § 237(b)

Question 38

A contracts to sell and B to buy on 30 days credit 3,000 tons of iron rails at a stated price. B purchases iron rails heavily from various sources for use in his business, and in consequences A has difficulty in securing 3,000 tons and the market price is substantially increased. A fails to deliver the rails. What claim, if any, might B have against A? Why?

Answer 38

B has a claim against A for breach of contract. B’s purchase of iron rails from other sources for use in his business is not a failure of performance because B is under no duty to refrain from purchasing for that purpose. A’s failure to deliver the rails is therefore a breach. Restatement 2d of Contracts § 237(b)

Question 39

A contracts to sell and B to buy on 30 days credit 3,000 tons of iron rails at a stated price. B maliciously buys iron rails heavily from various sources in order to prevent A from performing his contract with B. What claim, if any, does B have against A? Does A have a duty?

Answer 39

B has no claim against A. B’s malicious purchase of iron rails from other sources is material breach of his duty of good faith and fair dealing (§ 204), which operates as the non-occurrence of a condition of A’s duty to deliver the rails, discharging it. Restatement 2d of Contracts § 237(b)

Question 40

A and B make an employment contract. After the service has begun, A, the employee, commits a material breach of his duty to give efficient service that would justify B in discharging him. B is not aware of this but discharges A for an inadequate reason. What claim, if any, does B have against A or A against B?

Answer 40

A has no claim against B for discharging him. B has a claim against A for damages for total breach (§ 243) based on B’s loss due to A’s failure to give efficient service up to the time of discharge, but not for damages based on the loss of A’s services after that time, because that loss was caused by B’s discharge of A and not by A’s failure to give efficient service. Restatement 2d of Contracts § 237(c)

Question 41

A contracts to sell and B to buy goods on 30 days credit. A delivers defective goods, which B rejects in ignorance of their defects. What claim, if any, might B have against A? A against B? Why?

Answer 41

A has no claim against B. B has a claim against A for total breach (§ 243), but can recover nominal damages only since the unavailability of the goods to B was caused by B’s rejection and not by their defects. Restatement 2d of Contracts § 237(c)

Question 42

A contracts to sell and B to buy goods on 30 days credit. A delivers defective goods, which B rejects in ignorance of their defects. When B rejects the goods he states an insufficient reason, which induces a failure by A to cure the defects in the goods. May B, nonetheless, rely on the defects to justify his rejection?

Answer 42

B is precluded from relying on the defects to justify his rejection, not because of his ignorance itself, but because his giving of an insufficient reason for rejection excused the non-occurrence of the condition of his duty to take and pay for the goods (§ 248. Uniform Commercial Code § 2-605). Restatement 2d of Contracts § 237(d)

Question 43

A contracts to build a house for B, for which B promises to pay $50,000 in monthly progress payments equal to 85% of the value of the work with the balance to be paid on completion. When A completes construction, B refuses to pay the $7,500 balance claiming that there are defects that amount to an uncured material breach. What claim, if any, might A have against B? A against B? Why?

Answer 43

If the breach is material, A’s performance is not substantial and he has no claim under the contract against B, although he may have a claim in restitution (§ 374). If the breach is not material, A’s performance is said to be substantial, he has a claim under the contract against B for $7,500, and B has a claim against A for damages because of the defects. Restatement 2d of Contracts § 237(d)

Question 44

A contracts to build a building for B. B delays making the site available to A, giving A a claim against B for damages for partial breach. A then commits a material breach and B properly cancels the contract. What claim, if any, might B have against A? A against B? Why?

Answer 44

B has a claim against A for damages for total breach, but A still has a claim against B for damages for partial breach. Restatement 2d of Contracts § 237(e)

Question 45

A contracts to sell and B to buy a machine for $10,000, delivery of the machine and payment of the price to be made at a stated place on July 1. On July 1 both parties are present at that place, but A neither delivers nor offers to deliver the machine and B neither pays nor offers to pay the price. What claim, if any, might B have against A? A against B? Why?

Answer 45

A has no claim against B, and B has no claim against A. See Uniform Commercial Code §§ 2-507(1) and 2-511(1). If, however, B had committed a material breach by failing to go to the stated place, A would have had a claim against B for damages for total breach. See §§ 237, 243. Restatement 2d of Contracts § 238(a)

Question 46

A contracts to sell and B to buy a machine for $10,000, delivery of the machine and payment of the price to be made at a stated place on July 1. On July 1 both parties are present at that place, but A neither delivers nor offers to deliver the machine and B neither pays nor offers to pay the price. On July 2, B, with manifested present ability to do so, offers to pay the price if A simultaneously delivers the machine, but A refuses to deliver the machine. What claim, if any, might B have against A? Why?

Answer 46

If the delay of one day does not exceed the time after which A is discharged (§ 242), A’s refusal is a breach. If it exceeds that time, B has no claim against A. Restatement 2d of Contracts § 238(a)

Question 47

A contracts to sell and B to buy land for $50,000. The land is to be conveyed free of liens and encumbrances, but B knows that it is subject to a $30,000 mortgage held by C which A expects to satisfy out of the $50,000 purchase price. A, in the presence of B and C, makes a conditional offer of a deed of the property subject to the mortgage, and both A and C present documents that are legally sufficient to satisfy the mortgage debt to be delivered immediately on payment of the price by B. B thereupon refuses to pay the price. What claim, if any, does A have against B? Why?

Answer 47

In view of the circumstances at the time the contract was made, A’s offer is sufficient, and A has a claim against B for damages for total breach of contract. Restatement 2d of Contracts § 238(b)

Question 48

A contracts to sell and B to buy a machine for $10,000, delivery of the machine and payment of the price to be made at a stated place on July 1. On July 1, A puts the machine at B’s disposition and requests that he pay for it. B refuses to pay and A, after attempting unsuccessfully to resell the machine, brings an action for the price under Uniform Commercial Code § 2-709. What must A do to for a court to award judgment against B for the full price?

Answer 48

A court will award judgment for the full price only if A holds the machine for the buyer during the action. See Uniform Commercial Code § 2-709(2). Restatement 2d of Contracts § 238(c)

Question 49

A promises to sell real estate to B, delivery of the deed to be four years from July 1. B promises to pay $50,000 in installments of $10,000 on each July 1 for five years. B duly pays the first three installments but does not pay the fourth, and A brings an action to recover it. What must A do to for a court to award judgment against B?

Answer 49

A has judgment but the judgment is not collected until after the July 1 when the payment of the fifth installment and the delivery are due. The court will restrain collection of the judgment until A makes an offer to transfer the real estate conditional on being paid the amount of the judgment and also the fifth installment of the price. See Illustration 8 to § 234 and Illustration 2 to § 358. Restatement 2d of Contracts § 238(c)

Question 50

A contracts to sell and B to buy a house for $50,000. The contract contains the provision, “This contract is conditional on approval by X Bank of B’s pending mortgage application.” Under what condition does performance by B become due? By A?

Answer 50

Approval by X Bank is a condition of B’s duty, and therefore if X Bank does not approve B’s application, performance by B will not become due, even if A makes an offer of a deed. But it is not a condition of A’s duty and therefore performance by A will become due if, although X Bank does not approve B’s application, B makes an offer to pay $50,000. See Illustration 4 to § 226. Under § 251, performance by A will not become due if B does not pay or offer to pay $50,000 because A did not assume the risk that he would nonetheless have to perform. Restatement 2d of Contracts § 239(a)

Question 51

A, a general contractor, contracts with B, a subcontractor, for the plumbing work on a construction project. B is to receive $100,000, payable monthly as the work progresses “on condition that Owner shall have paid Contractor therefor.” B works for three months and makes monthly requests for payment of a total of $60,000 from A. When A does not pay B because the owner has not paid A for the plumbing work, B stops work and a month later notifies A that he cancels the contract. How could a court find B’s cancellation to be breach?

Answer 51

If the court determines, in the light of the quoted language and other circumstances, that B assumed the risk that he would have to perform even if A did not pay him on the ground that the owner did not pay A, A’s justifiable non-payment on that ground does not operate as a failure to perform under § 237 and therefore B’s cancellation is a breach. Compare Illustration 1 to § 227 and Illustration 2 to § 237. Restatement 2d of Contracts § 239(b)

Question 52

A, a general contractor, contracts with B, a subcontractor, for the plumbing work on a construction project. B is to receive $100,000, payable monthly as the work progresses “on condition that Owner shall have paid Contractor therefor.” B works for three months and makes monthly requests for payment of a total of $60,000 from A. A unjustifiably refuses to pay B, although the owner has paid A for the plumbing work. B stops work and a month later notifies A that he cancels the contract. How could a court find B’s cancellation not to be breach?

Answer 52

Although B assumed the risk that he would have to perform even if A did not pay on the ground that the owner did not pay A, A’s non-payment is not justified on that ground and therefore operates as a failure to perform under § 237. If a court concludes that the failure is material and that B’s cancellation came when it was too late for A to cure it, B’s cancellation is not a breach. Compare Illustration 1 to § 227 and Illustration 2 to § 237. Restatement 2d of Contracts § 239(b)

Question 53

A contracts to sell and B to buy a quantity of dressed hogs and a quantity of live hogs at stated prices for each quantity. A is to deliver the dressed hogs first and the live hogs 15 days later, and B is to pay for each delivery within 30 days after it is made. A delivers the dressed hogs, but unjustifiably refuses to deliver the live ones. Can A still recover the stated price for the dressed hogs? What claim, if any, might B have against A?

Answer 53

If a court finds that delivery of the dressed hogs and payment of the price stated for them are agreed equivalents, A can recover the stated price for the dressed hogs under the contract. B then has a claim against A for damages for his failure to deliver the live hogs. Restatement 2d of Contracts § 240(b)

Question 54

A contracts to sell and B to buy a quantity of dressed hogs and a quantity of live hogs at stated prices for each quantity. A is to deliver the dressed hogs first and the live hogs 15 days later, and B is to pay for each delivery within 30 days after it is made. A has no right to payment for either the dressed or the live hogs until 30 days after delivery of the live ones, but A unjustifiably refuses to deliver the live hogs until B pays for the dressed ones. Can A still recover the stated price for the dressed hogs? What claim, if any, might B have against A?

Answer 54

If a court finds that delivery of the dressed hogs and the price stated for them are agreed equivalents, A can recover the stated price for the dressed hogs under the contract. See § 227(1). B then has a claim against A for damages for his failure to deliver the live hogs. Restatement 2d of Contracts § 240(b)

Question 55

A contracts to sell and B to buy a quantity of dressed hogs and a quantity of live hogs at stated prices for each quantity. A is to deliver the dressed hogs first and the live hogs 15 days later, and B is to pay for each delivery within 30 days after it is made. Before A delivers the dressed hogs, he repudiates the contract by stating that he will not deliver the live ones. B then refuses to accept the dressed hogs. Can A still recover the stated price for the dressed hogs? What claim, if any, does B have against A? A against B?

Answer 55

Even if a court finds that delivery of the dressed hogs and payment of the price stated for them are agreed equivalents, A has no claim against B. B has a claim against A for damages for total breach of contract (§ 253). Restatement 2d of Contracts § 240(b)

Question 56

A contracts with B to work for one year as a real estate salesman and to devote his full time to this work. A is to receive half of the real estate commission on all sales that he effects. A devotes full time to this work for ten months, but unjustifiably devotes only part time for the last two months. Can A still recover the unpaid commissions on the final two months? What claim, if any, might B have against A?

Answer 56

A court may apportion the unpaid commissions earned by A into those earned during the first ten months and those earned under the last two months according to the formula stated in the contract and, if it finds that working full time for ten months and the commissions on the sales over those months are agreed equivalents, A can recover the unpaid commissions for those months under the contract. B then has a claim against A for damages for his failure to devote full time during the last two months. Restatement 2d of Contracts § 240(d)

Question 57

A contracts with B to furnish the rights to 23 motion pictures to be selected by B from a much larger list over a period of five years. The contract states a total price of $23,000, but does not break it down into $1,000 for each picture. A furnishes B with the rights to only 14 pictures, which B shows, and then A unjustifiably refuses to furnish the rights to 9 others. Can A still recover the stated price for each picture? What claim, if any, might B have against A?

Answer 57

A court may apportion the price as $1,000 for each picture and, if it finds that the furnishing of rights to 14 pictures and the payment of $14,000 are agreed equivalents, A can recover that amount under the contract. B has a claim for damages against A for his failure to furnish the rights to the 9 other pictures. Restatement 2d of Contracts § 240(d)

Question 58

A contracts with B to do specified work on B’s subdivision. A is to do the excavation and grading of lots and streets for a lump sum price of $75,000, payable on completion of that part of the work. A is then to make street improvements, including the installation of curbs and gutters, for stated unit prices, payable on completion of that part of the work. A is to provide separate performance bonds for each part. A does the excavation and grading of lots and streets but then unjustifiably refuses to make street improvements. B refuses to pay A for excavation and grading, although he can easily have the street improvements made by another contractor. The excavation and grading of lots and streets and the payment of $75,000 are agreed equivalents. What claim, if any, does A have against B or B have against A?

Answer 58

A has a claim against B for $75,000 under the contract for the excavation and grading. B has a claim for damages against A for his unjustified failure to make street improvements. Restatement 2d of Contracts § 240(e)

Question 59

A contracts to build a house for B for $50,000, progress payments to be made monthly in an amount equal to 85% of the price of the work performed during the preceding month, the balance to be paid on the architect’s certificate of satisfactory completion of the house. A unjustifiably stops work at the end of a month before the work is substantially completed and sues for the progress payment for that month. Can A recover anything for the performance under contract? What claim, if any, does A have against B or B have against A?

Answer 59

The performance during that month and the corresponding progress payment are not agreed equivalents. A can recover nothing under the contract for that performance. B has a claim against A for damages for breach. Whether A has a claim against B in restitution is determined under the rules stated in §§ 370-77. Restatement 2d of Contracts § 240(e)

Question 60

A contracts with B to drive 10,000 logs from various points down a river to B’s boom at one cent per log mile. Because of a flood, A drives only 5,763 logs an average distance of 100 miles each to B’s boom, and leaves the other 4,237 logs on the banks part of the way to B’s boom. B expects to resell the logs and can resell the 5,763 at the same unit price as the entire 10,000. Can A recover anything for the performance under contract? What claim, if any, might A have against B or B have against A?

Answer 60

The driving of the logs to B’s boom and the corresponding price at the contract rate are agreed equivalents, but the driving of logs part way and the corresponding price at the contract rate are not. A can recover $5,763 under the contract for the 5,763 logs that he has driven to B’s boom, but can recover nothing for the remaining 4,237 logs that he has driven only part of the way. If A’s failure to drive the remaining logs to B’s boom is unjustified, it is a breach, and B has a claim against A for damages. Whether A’s failure is justified on the ground of impracticability of performance is determined under the rules stated in §§ 261 and 263. Restatement 2d of Contracts § 240(e)

Question 61

The United States contracts with A under an “Industrial Preparedness Contract” for the production in volume of an electronic device. The work is to be done in three steps. Step I requires A to draw up plans and make a pilot run. Step II requires A to acquire equipment for production. Step III, to be taken only in case of national emergency and after receipt of an order from the United States, requires volume production and delivery in accordance with a stated schedule. A is required to maintain a state of readiness for this step over a six-year period. Specified payments are to be made on the completion of Steps I and II and against deliveries during Step III. A completes Steps I and II and, after having been paid $150,000, repudiates the contract when $50,000 is still unpaid on Step II. A sues for that unpaid balance of $50,000. Can A recover anything for the performance under contract? What claim, if any, does A have against the United States or the United States have against A?

Answer 61

The completion of Steps I and II and the payment of the amounts specified in the contract for those steps are not agreed equivalents. A has no claim against the United States for that performance. The United States has a claim against A for damages for breach. Restatement 2d of Contracts § 240(e)

Question 62

A contracts with B to construct and maintain ten signs advertising B’s motel for $1,600 a year, $100 each for eight smaller signs and $400 each for two larger signs. The signs are of a special design not easily obtainable elsewhere. A contracts with B to construct and maintain ten signs advertising B’s motel for $1,600 a year, $100 each for eight smaller signs and $400 each for two larger signs. A’s failure to construct the remaining two signs will not appreciably diminish the effect of the other eight. Can A recover anything for the performance under contract? What claim, if any, does B have against A?

Answer 62

The construction and maintenance of the eight signs and the corresponding price at the contract rate are agreed equivalents. A can recover $1,100 a year under the contract for the signs that he constructs and maintains. B has a claim against A for damages for breach. Restatement 2d of Contracts § 240(e)

Question 63

A contracts with B to construct and maintain ten signs advertising B’s motel for $1,600 a year, $100 each for eight smaller signs and $400 each for two larger signs. The signs are part of a series beginning “10 more miles to B’s place,” so that the failure to construct the remaining two will appreciably diminish the effect of the other eight. A contracts with B to construct and maintain ten signs advertising B’s motel for $1,600 a year, $100 each for eight smaller signs and $400 each for two larger signs. Can A recover anything for the performance under contract? What claim, if any, might A have against B or B have against A?

Answer 63

The construction and maintenance of each sign and the corresponding price at the contract rate are not agreed equivalents. A can recover nothing under the contract for the signs that he constructs and maintains. B has a claim against A for damages for breach. Whether A has a claim against B in restitution is determined under the rules stated in §§ 370-77. Restatement 2d of Contracts § 240(e)

Question 64

A, a subcontractor, contracts to do excavation and earth moving on a housing subdivision project for B, the owner and general contractor, and to do all work “in a workmanlike manner.” B is to make monthly progress payments for the work performed during the preceding month less a retainer of ten percent. A negligently damages a building with his bulldozer causing serious damage and denies any liability for B’s loss. When B refuses to make further progress payments until A repairs the damage or admits liability, A notifies B that he cancels the contract. What claim, if any, might A have against B or B have against A?

Answer 64

If the court determines that A’s breach is material, A has no claim against B. B has a claim against A for damages for breach of contract. Restatement 2d of Contracts § 241(a)

Question 65

A contracts with B to do specified work on B’s subdivision. A is to do the excavation and grading of lots and streets for a lump sum price of $75,000, payable on completion of that part of the work. A is then to make street improvements, including the installation of curbs and gutters, for stated unit prices, payable on completion of that part of the work. A is to provide separate performance bonds for each part. A completes the part concerned with the excavation and grading of lots and streets but fails in a minor respect to comply with the specifications and unjustifiably refuses to make street improvements. B refuses to pay A for excavation and grading, although he can easily have the street improvements made by another contractor. What claim, if any, might A have against B or B have against A?

Answer 65

If a court determines that the failure is not material, A has a claim against B for $75,000 under the contract for the excavation and grading. B has a claim for damages against A for his failure fully to perform as to excavation and grading and also for his unjustified refusal to make street improvements. Restatement 2d of Contracts § 241(a)

Question 66

A contracts to sell and B to buy 300 crates of Australian onions, shipment to be from Australia in March. A has 300 crates ready for shipment in March, but government requisitions prevent him from loading more than 240 crates on the only ship available in March. B refuses to accept or pay for the onions when they are tendered. What claim, if any, might A have against B or B have against A?

Answer 66

Under the circumstances stated in Subsections (a) and (c) of § 241, A’s failure is material and A has no claim against B. If A’s failure is unjustified, B has a claim against A for damages for partial breach because of the delay even if A cures his failure, and has a claim against A for damages for total breach if A does not cure his failure (§ 243). Restatement 2d of Contracts § 241(d)

Question 67

A promises to sell to B a lot in a subdivision for $8,000. B promises to pay in four annual installments of $2,000 each, beginning one year after execution of the contract. A promises to begin to make improvements and pave the streets within 60 days and to complete work within a reasonable time and promises to deliver a deed at the time of the final payment. A fails to pave the streets, and B thereupon refuses to pay any installments. B can have the part of the street in front of his own lot paved for $500, but this will not give him the expected access to his lot because the rest of the street is not paved. What claim, if any, might A have against B or B have against A?

Answer 67

Under the circumstances stated in Subsections (a), (b), and (c) of § 241, the failure of performance is material and A has no claim against B. If A’s failure is unjustified, B has a claim against A for damages for partial breach because of the delay even if A cures his failure, and has a claim against A for damages for total breach if A does not cure his failure (§ 243). Restatement 2d of Contracts § 241(d)

Question 68

A contracts to sell and B to buy land for $25,000. B is to make a $5,000 down payment and pay the balance in four annual installments of $5,000 each. A is to proceed immediately to have abstracts of title prepared showing a marketable title and to deliver them prior to the time for payment of the first annual installment. Without explanation, A fails to have abstracts prepared for delivery prior to the time for payment of the first annual installment. B refuses to pay that installment. What claim, if any, might A have against B or B have against A?

Answer 68

Under the circumstances stated in Subsections (a)–(d) of § 241, the failure of performance is material and A has no claim against B. B has a claim against A for damages for partial breach based on the delay if A cures his failure and a claim for damages for total breach if he does not (§ 243). Restatement 2d of Contracts § 241(e)

Question 69

A contracts to build a house for B, using pipe of Reading manufacture. In return, B agrees to pay $75,000, with provision for progress payments. Without B’s knowledge, a subcontractor mistakenly uses pipe of Cohoes manufacture which is identical in quality and is distinguishable only by the name of the manufacturer which is stamped on it. The substitution is not discovered until the house is completed, when replacement of the pipe will require destruction of substantial parts of the house. B refuses to pay the unpaid balance of $10,000. What claim, if any, might A have against B or B have against A?

Answer 69

Under the circumstances stated in Subsections (a), (c), and (e) of § 241, the failure of performance is not material and A has a claim against B for the unpaid balance of $10,000, subject to a claim by B against A for damages for A’s breach of his duty to use Reading pipe. See Illustration 1 to § 229. Restatement 2d of Contracts § 241(f)

Question 70

A contracts to build a supermarket for B. In return B agrees to pay $250,000, with provision for progress payments. A completes performance except that, angered by a dispute over an unrelated transaction, he refuses to build a cover over a compressor. B can have the cover built by another builder for $300. B refuses to pay the unpaid balance of $40,000. What claim, if any, does A have against B or B have against A?

Answer 70

In spite of the circumstances stated in Subsection (e) of § 241, under the circumstances stated in Subsections (a), (b), and (c) of § 241, the failure of performance is not material and A has a claim against B for the unpaid balance of $40,000, subject to a claim by B against A for damages for A’s breach of his duty to build a cover over the compressor. Restatement 2d of Contracts § 241(f)

Question 71

A contracts to build a house for B for $50,000, progress payments to be made monthly in an amount equal to 85% of the price of the work performed during the preceding month, the balance to be paid on the architect’s certificate of satisfactory completion of the house. Without justification B fails to make a $5,000 progress payment. A thereupon stops work on the house. B tenders the progress payment after a two-day delay along with damages for the delay. A refuses to accept the payment and resume work and notifies B that he cancels the contract. What claim, if any, might A have against B or B have against A?

Answer 71

B’s tender cured his breach before A’s remaining duties to render performance were discharged, and B has a claim against A for total breach of contract, subject to a claim by A against B for damages for partial breach because of the delay. Restatement 2d of Contracts § 242(b)

Question 72

A, a theater manager, contracts with B, an actress, for her performance for six months in a play that A is about to present. B becomes ill during the second month of the performance, and A immediately engages another actress to fill B’s place during the remainder of the six months. B recovers at the end of ten days and offers to perform the remainder of the contract, but A refuses. Does A have a duty? Why?

Answer 72

Whether B’s failure to render performance due to illness immediately discharges A’s remaining duties of performance, instead of merely suspending them, depends on the circumstances stated in § 242(b) and in § 241(b) and (d), and in particular on the possibility as it reasonably appears to A when B becomes ill of the illness being only temporary and of A’s obtaining an adequate temporary substitute. Restatement 2d of Contracts § 242(c)

Question 73

A contracts to sell and B to buy 1,000 shares of stock traded on a national securities exchange, delivery and payment to be on February 1. B offers to pay the price on February 1, but A unjustifiably and without explanation fails to offer to deliver the stock until February 2. B then refuses to accept the stock or pay the price. Does B have a duty? Why? What claim, if any, might A have against B or B have against A?

Answer 73

Under the circumstances stated in § 242(b) and in § 241(a) and (c), the period of time has passed after which B’s remaining duties to render performance are discharged because of A’s material breach and A therefore has no claim against B. B has a claim against A for breach. Restatement 2d of Contracts § 242(c)

Question 74

A contracts to sell and B to buy land, the transfer to be on February 1. B tenders the price on February 1, but A does not tender a deed until February 2. B then refuses to accept the deed or pay the price. What claim, if any, might A have against B or B have against A?

Answer 74

Under the circumstances stated in § 242(b) and (c) and in § 241(a), in the absence of special circumstances, the period of time has not passed after which B’s remaining duties to render performance are discharged. Although A’s breach is material, it has been cured. A has a claim against B for damages for total breach of contract, subject to a claim by B against A for damages for partial breach because of the delay. Restatement 2d of Contracts § 242(c)

Question 75

A agrees to sell and B to buy land, the transfer to be on February 1. A tenders a sufficient deed on February 1, but B explains that although he wants to carry out the contract he would like to have a few weeks more to raise the amount of the price. A replies that unless B tenders the price immediately he will not deliver the deed. On February 15, B sues for specific performance, offering in his pleading to pay the agreed price with interest to compensate A for the delay. Does A have a duty? How might a court rule on B’s suit for specific performance?

Answer 75

In the circumstances stated in § 242(b) and in § 241(a), (b), and (d), the period of time has not passed after which A’s remaining duties to render performance are discharged. Although B’s breach is material, the court may decree specific performance subject to B’s tender of the price and payment by B of damages for partial breach to compensate A for the delay. Restatement 2d of Contracts § 242(c)

Question 76

A contracts to sell and B to buy 5,000 tons of iron at a stated price, delivery to be in five monthly installments of 1,000 tons each on the first of each month and payment for each installment to be made on the tenth of that month. A makes the first three deliveries on the first of the month but, although the market price for iron is falling, he delays twelve days in making the fourth delivery, explaining to B that temporary labor troubles have caused the delay. B notifies A that he refuses to take or pay for the fourth delivery and that he cancels the contract. Is B’s notification a repudiation? What must be known to determine whether B’s remaining duties are discharged?

Answer 76

Whether the period of time has passed after which B’s remaining duties to render performance are discharged, so that B’s notification is not a repudiation, depends on the circumstances stated in § 242(b) and in § 241(a), (b), (d), and (e). See Uniform Commercial Code § 2-612. Restatement 2d of Contracts § 242(c)

Question 77

A contracts to sell and B to buy 5,000 tons of iron at a stated price, delivery to be in five monthly installments of 1,000 tons each on the first of each month and payment for each installment to be made on the tenth of that month. A makes the first four deliveries on the first of the month, and B makes the first three payments by the tenth but does not make the fourth payment. The market price for iron is falling and B gives no assurances or explanation for the delay. On the twentieth of the month A notifies B that he will make no further deliveries and that he cancels the contract. Is A’s notification a repudiation? What must be known to determine whether A’s remaining duties are discharged?

Answer 77

Whether the period of time has passed after which A’s remaining duties to render performance are discharged, so that A’s notification is not a repudiation, depends on the circumstances stated in § 242(b) and in § 241(a), (b), (d), and (e). See Uniform Commercial Code § 2-612. Restatement 2d of Contracts § 242(c)

Question 78

A contracts to charter a vessel belonging to B and to pay stipulated freight “on condition that the vessel arrive in New York ready for loading by March 1.” B promises that the vessel will arrive by that date and carry A’s cargo. B unjustifiably fails to have the vessel in New York to be loaded until March 2. A refuses to load the vessel. Have A’s remaining duties been discharged? What claim, if any, does A have against B or B have against A?

Answer 78

Whether or not the period of time has passed after which B’s uncured material failure would discharge A’s remaining duties to render performance, A’s duties are discharged under § 225(2) by the non-occurrence of an event that is made a condition by the agreement of the parties. B has no claim against A. A has a claim against B for damages for total breach. Restatement 2d of Contracts § 242(d)

Question 79

A contracts to sell and B to buy land, the transfer to be on February 1. The parties use a printed form contract that provides that “time is of the essence.” B tenders the price on February 1, but A does not tender a deed until February 2. B then refuses to accept the deed or pay the price. What claim, if any, does A have against B?

Answer 79

Absent other circumstances indicating that performance by February 1 is of genuine importance, A has a claim against B for damages for total breach of contract. Restatement 2d of Contracts § 242(d)

Question 80

A contracts to sell and B to buy land, the transfer to be on February 1. The contract provides that A’s rights are “conditional on his tendering a deed on or before February 1.” B tenders the price on February 1, but A does not tender a deed until February 2. B then refuses to accept the deed or pay the price. What claim, if any, does A have against B?

Answer 80

A has no claim against B. But cf. Illustration 4 to § 229. Restatement 2d of Contracts § 242(d)

Question 81

A promises to sell to B a lot in a subdivision for $8,000. B promises to pay in four installments of $2,000 each, beginning one year after execution of the contract. A promises to begin to make improvements and pave the streets within 60 days and to complete work within a reasonable time and promises to deliver a deed at the time of the final payment. A commits a material breach by unjustifiably failing to pave the streets, and B thereupon refuses to pay any installments. What claim might B have against A? What could A do?

Answer 81

After a reasonable time for A to cure his material breach has passed (§ 242), B’s duty to pay the price is discharged, and he has a claim against A for damages for total breach. Restatement 2d of Contracts § 243(a)

Question 82

A promises to sell to B a lot in a subdivision for $8,000. B promises to pay in four installments of $2,000 each, beginning one year after execution of the contract. A promises to begin to make improvements and pave the streets within 60 days and to complete work within a reasonable time and promises to deliver a deed at the time of the final payment. A commits a material breach by unjustifiably failing to pave the streets. B pays the first installment although he knows of A’s material breach. Does B have a duty? What claim, if any, does B have against A?

Answer 82

B’s payment operates as a promise to pay the remaining installments in spite of the non-occurrence of a condition of his duty to do so. See § 237. Illustration 5 to § 84. B’s duty to pay the price is not discharged, and he has a claim against A merely for damages for partial breach because of the delay. Restatement 2d of Contracts § 243(a)

Question 83

A contracts to sell and B to buy for $8,000 a subdivision lot on which B plans to build a house for himself. Delivery of the deed and payment of the price are to be made within 30 days, and A promises to make improvements and pave the streets within one year. A delivers the deed and B pays the price within 30 days. A paves the streets and makes most but not all of the improvements within one year, but then repudiates by unjustifiably telling B that he refuses to make the rest of the improvements. What claim, if any, does B have against A?

Answer 83

B has a claim against A for damages for total breach, even though absent a repudiation B’s claim might be merely one for damages for partial breach. See § 243, Illustration 8. If A and B then agree that A will make the rest of the improvements, B has a claim against A merely for damages for partial breach because of the delay. Restatement 2d of Contracts § 243(b)

Question 84

A borrows $10,000 from B and promises to repay with interest in ten monthly installments. A unjustifiably fails to pay the first four installments. What claim, if any, does B have against A?

Answer 84

B has a claim against A merely for damages for partial breach for non-payment of the four unpaid installments. The result is the same even if A repudiates by telling B that he will not make the payments. Restatement 2d of Contracts § 243(d)

Question 85

A, an insurer, issues a policy of disability insurance to B under which monthly payments are to be made to B and the payment of additional premiums waived if B is totally and permanently disabled. B suffers total and permanent disability. A makes monthly payments for a year and then unjustifiably fails to make further payments. After A has been in default for a year, B sues A. What claim, if any, does B have against A?

Answer 85

B has a claim against A merely for damages for partial breach for non-payment during the second year. The result is the same even if A repudiates by telling B that he will not make the payments. Restatement 2d of Contracts § 243(d)

Question 86

For a fee of $25,000, paid in advance, A contracts with B, an impresario, to sing in five concerts offered to the public as a series. A unjustifiably fails to sing in the first two concerts. What claim, if any, does B have against A?

Answer 86

A’s breach so substantially impairs the value of the contract to B that B has a claim against A for damages for total breach. Restatement 2d of Contracts § 243(e)

Question 87

A contracts to sell and B to buy for $8,000 a subdivision lot on which B plans to build a house for himself. Delivery of the deed and payment of the price are to be made within 30 days, and A promises to make improvements and pave the streets within one year. A delivers the deed and B pays the price within 30 days. In spite of repeated requests from B, A does not make improvements or pave streets for two years. What claim, if any, does B have against A?

Answer 87

A’s breach so substantially impairs the value of the contract to B that B has a claim against A for damages for total breach. Restatement 2d of Contracts § 243(e)

Question 88

A contracts to sell and B to buy for $8,000 a subdivision lot on which B plans to build a house for himself. Delivery of the deed and payment of the price are to be made within 30 days, and A promises to make improvements and pave the streets within one year. A delivers the deed and B pays the price within 30 days. A paves the streets and makes most but not all of the improvements within one year, and gives B reasonable assurances that the remaining improvements will be completed with a delay of no more than one month. What claim, if any, does B have against A?

Answer 88

B has a claim against A merely for damages for partial breach because of the delay. Restatement 2d of Contracts § 243(e)

Question 89

A contracts to sell and B to buy a particular machine. B is to pay the price on June 15 and A is to deliver the machine on July 1, at which time risk of loss is to pass to B. B does not pay on June 15, and on June 20 the machine is accidentally destroyed. Does B have a duty?

Answer 89

B’s duty to pay damages to A for his non-payment is discharged. Restatement 2d of Contracts § 244(a)

Question 90

A contracts with B to repair B’s building for $20,000, payment to be made “on the satisfaction of C, B’s architect, and the issuance of his certificate.” A fully performs his duty to make the repairs, but B induces C to refuse to issue his certificate. What claim, if any, does A have against B?

Answer 90

A has a claim against B for $20,000. B’s breach of his duty of good faith and fair dealing contributed materially to the non-occurrence of the condition, the issuance of the certificate, excusing it. Cf. Illustrations 5, 6, 7, and 8 to § 227. Restatement 2d of Contracts § 245(a)

Question 91

A contracts to sell and B to buy land for $100,000. At the same time A contracts to pay C, a real estate broker, as his commission, $5,000 “on the closing of title.” A unjustifiably refuses to consummate the sale. What claim, if any, does C have against A?

Answer 91

C has a claim against A for $5,000, less any expenses that C saved because the sale was not consummated. A’s breach of his duty of good faith and fair dealing contributed materially to the non-occurrence of the condition, the closing of title, excusing it. See Illustration 4 to § 227. Restatement 2d of Contracts § 245(a)

Question 92

A contracts to sell and B to buy a house for $50,000, with the provision, “This contract is conditional on approval by X Bank of B’s pending mortgage application.” B fails to make reasonable efforts to obtain approval and, when the X Bank disapproves the application, refuses to perform when A tenders a deed. What claim, if any, does A have against B?

Answer 92

A has a claim against B for total breach of contract. B’s breach of his duty of good faith and fair dealing contributed materially to the non-occurrence of the condition, approval of the application, excusing it. Cf. Illustration 8 to § 225. Restatement 2d of Contracts § 245(a)

Question 93

A contracts to sell and B to buy A’s rights as one of three lessees under a mining lease in Indian lands. The contract states that it is “subject only to approval by the Secretary of the Interior,” which is required by statute. B files a request for approval but A fails to support B’s request by giving necessary cooperation. Approval is denied and A cannot convey his rights. What claim, if any, does B have against A?

Answer 93

B has a claim against A for total breach of contract. A’s breach of his duty of good faith and fair dealing contributed materially to the non-occurrence of the condition, approval by the Secretary of the Interior, excusing it. Restatement 2d of Contracts § 245(a)

Question 94

A and B, about to become man and wife, make an ante-nuptial contract under which A is to pay B $100,000 if B survives A. Four years after their marriage, A shoots both B and himself. B dies instantly and A dies the following day. What claim, if any, does B’s estate have against A’s estate?

Answer 94

B’s estate has a claim against A’s estate for $100,000. A’s breach of his duty of good faith and fair dealing contributed materially to the non-occurrence of the condition, B’s surviving A, excusing it. The fact that B’s estate cannot show that B would otherwise have survived A does not prevent it from recovering the $100,000. Compare the rule on certainty in § 352. Restatement 2d of Contracts § 245(b)

Question 95

A, the owner of a manufacturing plant, contracts to transfer the plant to B. B is to pay A $500,000 plus a bonus of $100,000 if the profits from the plant exceed a stated amount during the first year of its operation. Six months after the transfer B sells the plant to C, who dismantles it. B refuses to pay the bonus. What claim, if any, might A have against B? Why?

Answer 95

Whether A has a claim against B depends on whether B’s failure to operate the plant for a year is a breach of his duty of good faith and fair dealing which contributed materially to the non-occurrence of the condition, the profits exceeding the stated amount during the first year, excusing it. The fact that A cannot show that the profits would otherwise have exceeded the stated amount does not prevent him from recovering. If, however, B shows that they would not have exceeded that amount, A cannot recover. Compare the rule on certainty in § 352. Restatement 2d of Contracts § 245(b)

Question 96

A contracts to sell and B to buy A’s rights as one of three lessees under a mining lease in Indian lands. The contract states that it is “subject only to approval by the Secretary of the Interior,” which is required by statute. B files a request for approval but A fails to support B’s request by giving necessary cooperation. Approval is denied and A cannot convey his rights. A shows that even if he had given his cooperation, the Secretary of the Interior would have withheld approval on other grounds. What claim, if any, does B have against A?

Answer 96

B has no claim against A for breach of contract. A’s breach of his duty of good faith and fair dealing did not contribute materially to the non-occurrence of the condition, and its non-occurrence is not excused. Restatement 2d of Contracts § 245(b)

Question 97

A, a subcontractor, contracts to do excavation and earth moving on a housing subdivision project for B, the owner and general contractor, and to do all work “in a workmanlike manner.” B is to make monthly progress payments for the work performed during the preceding month less a retainer of ten percent. A negligently damages a building with his bulldozer causing serious damage and denies any liability for B’s loss. B refuses to make further progress payments until A repairs the damage or admits liability, but allows A to continue work on the project. Without any advance notice, B then notifies A that he cancels the contract. What claim, if any, does A have against B?

Answer 97

A has a claim against B for total breach of contract. Even if a court would otherwise have determined that A’s uncured material failure had continued long enough to discharge B’s remaining duties of performance, B’s acceptance of performance by A operated as a promise to perform, excusing the delay in cure. Cf. Illustration 1 to § 241. Restatement 2d of Contracts § 246(b)

Question 98

A contracts to sell and B to buy a machine for $10,000, delivery to be on March 1 and payment to be within 30 days thereafter. A does not deliver the machine until March 10, in such circumstances that the delay is a material breach. B accepts the machine but refuses to pay the price. What claim, if any, might A have against B or B have against A?

Answer 98

A has a claim against B for the price of $10,000 under Uniform Commercial Code § 2-709, subject to a claim by B against A for damages for partial breach because of the delay under Uniform Commercial Code §§ 2-607(2) and 2-714. Restatement 2d of Contracts § 246(b)

Question 99

A contracts to sell and B to buy 10,000 tons of steel, to be delivered in installments of 1,000 tons a month for ten months, payment to be made 90 days after each delivery. A commits a material breach by delay in delivery of the first two installments under such circumstances that B’s remaining duties of performance are discharged (§ 237). B nevertheless accepts delivery of the third installment without complaining of the previous breach. What claim, if any, might A have against B or B have against A?

Answer 99

B’s acceptance amounts to a promise to accept future installments in spite of the material breach. A has a claim against B for the price of each of the three installments, after the 90 day period has passed, under Uniform Commercial Code § 2-709, subject to a claim by B against A for damages for partial breach because of the delay under Uniform Commercial Code §§ 2-607(2) and 2-714. See Uniform Commercial Code § 2-612(3). Restatement 2d of Contracts § 246(c)

Question 100

A contracts to sell and B to buy a machine and governor that are sold as a single unit for $10,000, payment to be within 30 days of delivery. A delivers the machine with a defective governor, which constitutes a material breach. B accepts the machine but tenders back the defective governor. B’s acceptance of the machine amounts to a promise to pay $10,000 in spite of the defect in the governor. What claim, if any, might A have against B or B have against A?

Answer 100

A has a claim against B for the price of $10,000, subject to a claim by B against A for damages for partial breach because of the defect in the governor. See Uniform Commercial Code §§ 2-601 and 2-607. Restatement 2d of Contracts § 246(c)

Question 101

A contracts to sell and B to buy a machine and governor that are sold as a single unit for $10,000, payment to be within 30 days of delivery. A is entitled under the contract to deliver the machine first and the governor later. B accepts the machine, but when he receives the governor he promptly revokes his acceptance and tenders back both the machine and the governor. What claim, if any, does A have against B or B have against A?

Answer 101

B’s acceptance of the machine does not amount to a promise. A has no claim against B. B has a claim against A for damages for total breach of contract. See Uniform Commercial Code § 2-608. Restatement 2d of Contracts § 246(c)

Question 102

A contracts to build a house for B on B’s land for $50,000, payable in part in monthly progress payments with the balance due on completion. A builds the house but unjustifiably departs from the specifications in a number of respects. B moves into and uses the house, knowing of some of the departures and not knowing or having reason to know of others. B refuses to pay the balance of $10,000. What claim, if any, does A have against B?

Answer 102

B can rely on all of the departures, including those of which he knew, to show that A’s breach is material and that A has no claim against B for the $10,000 balance under the contract. Restatement 2d of Contracts § 246(d)

Question 103

A contracts to build a house for B on B’s land for $50,000, payable in part in monthly progress payments with the balance due on completion. A builds the house but unjustifiably departs from the specifications in a number of respects. B moves into and uses the house, knowing of some of the departures and not knowing or having reason to know of others. B tells A that he “will take” the house in spite of those departures of which he knows. What claim, if any, might A have against B or B have against A?

Answer 103

B can rely on the departures of which he did not know or have reason to know, but not on the departures of which he knew, to show that A’s breach is material and that A has no claim against B to the $10,000 balance under the contract. If B fails to show that A’s breach is material, A’s claim against B for the $10,000 balance is subject to B’s claim against A for damages for partial breach because of all of the departures, including those of which he knew. Restatement 2d of Contracts § 246(d)

Question 104

A contracts to sell and B to buy land for $10,000, the price to be payable in a down payment and 36 monthly installments and the deed to be delivered on payment of the last installment. The agreement provides that payment of installments on the dates due is a condition of A’s duty to deliver a deed. B does not pay any of the first twelve installments on the dates due, but A accepts them without comment. B tenders the thirteenth installment after the date due, but not later than was generally the case for the previous payments. Does A still have a duty? What claim, if any, does A have against B?

Answer 104

The non-occurrence of the condition during the period of time in which it would otherwise have to occur, failure to pay the thirteenth installment on the date due, is excused and A’s duty is not discharged. A has, however, a claim against B for damages for partial breach because of the delay. Restatement 2d of Contracts § 247(a)

Question 105

A contracts to build a house for B for $50,000, payable in part in monthly progress payments with the balance due on completion, all payments to be made on condition that A present a certificate from B’s architect showing that the work has been properly completed. B makes the last six out of seven progress payments without presentation of an architect’s certificate and without asking for one, and A materially changes his position in reliance on this. Although A fully performs, B refuses to pay the $10,000 balance because of A’s failure to present an architect’s certificate. What claim, if any, does A have against B?

Answer 105

The non-occurrence of the condition, presentation of the architect’s certificate, is excused and A has a claim against B for $10,000. Restatement 2d of Contracts § 247(a)

Question 106

A contracts to sell and B to buy land for $10,000, the price to be payable in a down payment and 36 monthly installments and the deed to be delivered on payment of the last installment. The agreement provides that payment of installments on the dates due is a condition of A’s duty to deliver a deed. B does not pay any of the first eleven installments on the dates due, but A accepts them without comment. A notifies B at the time that the twelfth installment is due that he intends to require prompt payment of the thirteenth and subsequent installments. B tenders the thirteenth installment after the date due, but not later than was generally the case for the previous payments. Is the non-occurrence of the condition excused by A’s previous acceptance?

Answer 106

The non-occurrence of the condition during the period of time in which it would otherwise have to occur, failure to pay the thirteenth installment on the date due, is not excused by A’s previous acceptance without comment of delayed installments. Restatement 2d of Contracts § 247(b)

Question 107

A contracts to build a house for B for $50,000, payable in part in monthly progress payments with the balance due on completion, all payments to be made on condition that A present a certificate from B’s architect showing that the work has been properly completed. B makes the last six out of seven progress payments without presentation of an architect’s certificate and without asking for one, and A materially changes his position in reliance on this. B notifies A shortly before completion of construction––and after A has materially relied––that he intends to require presentation of the architect’s certificate before paying the balance. Although A fully performs, B refuses to pay the $10,000 balance because of A’s failure to present an architect’s certificate. What claim, if any, does A have against B?

Answer 107

The non-occurrence of the condition, presentation of the architect’s certificate, is nevertheless excused and A has a claim against B for $10,000. Restatement 2d of Contracts § 247(b)

Question 108

A contracts to build a house for B on B’s land for $50,000, payable in part in monthly progress payments with the balance due on completion. A builds the house but unjustifiably departs from the specifications in a number of respects. On moving into the house, B gives A a list of seventeen defects to be cured, but omits three others of which he knew or had reason to know. B refuses to pay the balance of $10,000. What claim, if any, does A have against B?

Answer 108

Absent a showing that A could have cured the three defects in time if B had specified them then, B can rely on all of the defects to show that A’s breach is material and that A has no claim to $10,000 under the contract. Restatement 2d of Contracts § 248(b)

Question 109

A, a subcontractor, makes a contract with B, a contractor, to install a roof on a school that B is building. After A has begun work, B notifies him that the contract is cancelled because of A’s failure to provide enough skilled workmen as required by the contract. A sues B. B attempts to show that, although A may have provided enough skilled workmen, A so failed to follow specifications as to constitute a material breach. Is B precluded from showing this?

Answer 109

B is not precluded from showing this, even if he knew it at the time of the cancellation, unless A could have cured the defects in time if B had specified them then. Restatement 2d of Contracts § 248(b)

Question 110

A contracts to sell and B to buy land for $10,000, payment of the price and delivery of the deed to be “not later than July 30.” On the morning of July 30, B offers to give A his certified check for $10,000. A, giving no reason, rejects B’s check and refuses to offer to deliver a deed. Has B adequately satisfied the requirement to offer performance?

Answer 110

B’s offer to give his certified check satisfies the requirement of § 238 that B offer to pay A $10,000. Restatement 2d of Contracts § 249(a)

Question 111

A contracts to sell and B to buy land for $10,000, payment of the price and delivery of the deed to be “not later than July 30.” On the morning of July 30, B offers to give A his certified check for $10,000. A, giving no reason, rejects B’s check and demands legal tender. but, his demand comes after banking hours and he refuses to give B the necessary time to procure it. Has B adequately satisfied the requirement to offer performance?

Answer 111

B’s offer to give his certified check satisfies the requirement of § 238 that B offer to pay A $10,000. Restatement 2d of Contracts § 249(a)

Question 112

On April 1, A contracts to sell and B to buy land, delivery of the deed and payment of the price to be on July 30. On May 1, A tells B that he will not perform. Is this a repudiation?

Answer 112

A’s statement is a repudiation. Restatement 2d of Contracts § 250(b)

Question 113

A contracts to build a house for B for $50,000, progress payments to be made monthly in an amount equal to 85% of the price of the work performed during the preceding month, the balance to be paid on the architect’s certificate of satisfactory completion of the house. Without justification B fails to make a $5,000 progress payment and tells A that because of financial difficulties he will be unable to pay him anything for at least another month. Under what circumstances is B’s statement a repudiation?

Answer 113

If, after a month, it would be too late for B to cure his material failure of performance by making the delayed payment, B’s statement is a repudiation. See Illustration 2 to § 237. Restatement 2d of Contracts § 250(b)

Question 114

On April 1, A contracts to sell and B to buy land, delivery of the deed and payment of the price to be on July 30. On May 1, A tells B, “I am not sure that I can perform, and I do not intend to do so unless I am legally bound to.” Is this a repudiation?

Answer 114

A’s statement is not a repudiation. Restatement 2d of Contracts § 250(b)

Question 115

On April 1, A contracts to sell and B to buy land, delivery of the deed and payment of the price to be on July 30. On May 1, A tells C, a third person having no right under the contract, and not B, that he will not perform. C informs B of this conversation, although not requested by A to do so. Is this a repudiation?

Answer 115

A’s statement is not a repudiation. But see Comments b and c to § 251. Restatement 2d of Contracts § 250(c)

Question 116

On April 1, A contracts to sell and B to buy land, delivery of the deed and payment of the price to be on July 30. On May 1, A says nothing to B, but he contracts to sell the land to C. Is this a repudiation?

Answer 116

A’s making of the contract with C is a repudiation. Restatement 2d of Contracts § 250(c)

Question 117

On April 1, A contracts to sell and B to buy land, delivery of the deed and payment of the price to be on July 30. On May 1, A says nothing to B, but he mortgages the land to C as security for a $40,000 loan which is not payable until one year later. Is this a repudiation?

Answer 117

A’s mortgaging the land is a repudiation. Compare Illustration 4 to § 251. Restatement 2d of Contracts § 250(c)

Question 118

A contracts to employ B, and B to work for A, the employment to last a year beginning in ten days. Three days after making the contract B embarks on a ship for a voyage around the world. Is this a repudiation?

Answer 118

B’s embarking for the voyage is a repudiation. Restatement 2d of Contracts § 250(c)

Question 119

On April 1, A contracts to sell and B to buy land for $50,000, delivery of the deed and payment of the price to be on August 1. On May 1, the parties make an enforceable modification under which delivery of the deed and payment of the price are to be on July 30 instead of August 1. On June 1, A tells B that he will not deliver a deed until August 1. Is this a repudiation?

Answer 119

A’s statement is not a repudiation unless the one-day delay would, in the absence of a repudiation, have given B a claim for damages for total breach. See Illustration 4 to § 242. Restatement 2d of Contracts § 250(d)

Question 120

On April 1, A contracts to sell and B to buy land for $50,000, delivery of the deed and payment of the price to be on August 1. On May 1, the parties make an enforceable modification under which delivery of the deed and payment of the price are to be on July 30 instead of August 1. On June 1, A tells B that he will not deliver a deed at all unless B agrees to accept it on August 1. Is this a repudiation?

Answer 120

A’s statement is a repudiation. Even though A acts in the erroneous belief that the modification has no legal effect, the one-day delay would (in the absence of a repudiation) have given B a claim for damages for total breach. Restatement 2d of Contracts § 250(d)

Question 121

A contracts to let B use his concert hall on the evening of May 7 for a performance by B’s string quartet, in return for B’s promise to perform and to pay A a percentage of the receipts. The contract provides that B is not discharged even if he is unable to transport his quartet to A’s hall. On May 6, because of an unexpected airline strike, A reasonably believes that B’s quartet will be unable to come the 3,000 miles necessary to perform in his hall as scheduled. Without demanding adequate assurance of due performance (see § 251), A then contracts with C to let C hold a meeting in the hall on the evening of May 7. Was there a repudiation? By whom? Does B have a claim against A?

Answer 121

A’s contract with C is a repudiation of his contract with B (§ 250), which gives rise to a claim by B against A for damages for total breach (§ 253). If, however, B is in fact unable to bring his quartet to A’s hall on May 7, B’s claim against A is discharged (§ 254). Restatement 2d of Contracts § 251(b)

Question 122

A contracts to let B use his concert hall on the evening of May 7 for a performance by B’s string quartet, in return for B’s promise to perform and to pay A a percentage of the receipts. The contract provides that B is not discharged even if he is unable to transport his quartet to A’s hall. On May 6, because of an unexpected airline strike, A reasonably believes that B’s quartet will be unable to come the 3,000 miles necessary to perform in his hall as scheduled. Without demanding adequate assurance of due performance (see § 251), A then contracts with C to let C hold a meeting in the hall on the evening of May 7. However, B succeeds in chartering a plane and flies the 3,000 miles with his quartet in his private plane. He arrives in time to perform, but is unable to do so because C is using the hall. Does B have a claim against A?

Answer 122

B has a claim against A for damages for total breach (§ 243). Restatement 2d of Contracts § 251(b)

Question 123

On May 1, A contracts to sell and B to buy a parcel of land for $50,000, delivery of the deed and payment of the price to be on July 30. Unknown to both A and B, C has a dower interest in the land. On May 15, B discovers this and demands that A give him adequate assurance of due performance. A fails to do so, and B commences an action against A on July 1. Is A’s failure to give assurances a repudiation? Does B have a claim against A?

Answer 123

B had reasonable grounds to believe that A would commit a breach by non-performance that would of itself have given B a claim for damages for total breach. If the court concludes that a reasonable time for A to give assurances had passed on July 1, B properly treated A’s failure to give assurances as a repudiation. B then has a claim for damages against A for total breach. Restatement 2d of Contracts § 251(c)

Question 124

On May 1, A contracts to sell and B to buy a parcel of land for $50,000, delivery of the deed and payment of the price to be on July 30. Unknown to both A and B, C has an interest in the land as that of mortgagee under a mortgage that A can discharge at any time by payment of the mortgage debt. On May 15, B discovers this and demands that A give him adequate assurance of due performance. A fails to do so, and B commences an action against A on July 1. Is A’s failure to give assurances a repudiation? Does B have a claim against A?

Answer 124

B had no reasonable grounds to believe that A would commit a breach, B could not treat A’s failure to give assurances as a repudiation, and B has no claim for damages against A. Compare Illustration 6 to § 250. Restatement 2d of Contracts § 251(c)

Question 125

A contracts to sell and B to buy A’s house, delivery of the deed and payment of the price to be made during September. On September 1, A offers to deliver a deed to B which is defective in that a fence projects beyond the front line of the house and the swimming pool lacks a certificate of occupancy. Both defects can be cured by A within the month, but A fails to reply to a demand by B that A assure B that A will cure them within that time. On September 20, B notifies A that he cancels the contract. On September 30, A, having cured the defects, offers to deliver a conforming deed to B. Is A’s failure to give assurances a repudiation? Does B have a claim against A?

Answer 125

A court may conclude that, as a result of A’s apparent inability to perform, B had reasonable grounds to believe that A would commit a breach by non-performance that would of itself have given B a claim for damages for total breach, that A failed upon demand by B to give adequate assurance of due performance within a reasonable time, and therefore that B properly treated A’s failure as a repudiation. B then has a claim against A for damages for total breach. Restatement 2d of Contracts § 251(c)

Question 126

A contracts to let B use his concert hall on the evening of May 7 for a performance by B’s string quartet, in return for B’s promise to perform and to pay A a percentage of the receipts. The contract provides that B is not discharged even if he is unable to transport his quartet to A’s hall. On May 6, because of an unexpected airline strike, A reasonably believes that B’s quartet will be unable to come the 3,000 miles necessary to perform in his hall as scheduled. A telephones B on May 6 and asks B to assure him that he will be there on May 7. B says only “We will do our best to get there.” A then contracts with C to let C hold a meeting in the hall on the evening of May 7. B succeeds in chartering a plane and flies the 3,000 miles with his quartet. He arrives in time to perform, but is unable to do so because C is using the hall. Was there a repudiation? By whom? Does B have a claim against A?

Answer 126

In the absence of countervailing circumstances, a court should conclude that, as a result of B’s apparent inability to perform, A had reasonable grounds to believe that B would commit a breach by non-performance that would of itself have given A a claim for damages for total breach, that because of the shortness of time a demand by telephone conformed to the duty of good faith and fair dealing (§ 205), that B failed upon such a demand to give adequate assurance of due performance, and therefore that A properly treated B’s failure as a repudiation. A then has a claim against B for damages for total breach. Restatement 2d of Contracts § 251(d)

Question 127

A contracts to let B use his concert hall on the evening of May 7 for a performance by B’s string quartet, in return for B’s promise to perform and to pay A a percentage of the receipts. The contract provides that B is not discharged even if he is unable to transport his quartet to A’s hall. On May 6, because of an unexpected airline strike, A reasonably believes that B’s quartet will be unable to come the 3,000 miles necessary to perform in his hall as scheduled. A telephones B on May 6 and asks B to assure him that he will be there on May 7. B explains over the telephone that he has been able to charter a plane and expects to come as planned. A then contracts with C to let C hold a meeting in the hall on the evening of May 7. B flies the 3,000 miles with his quartet and arrives in time to perform, but is unable to do so because C is using the hall. Was there a repudiation? By whom? Does B have a claim against A?

Answer 127

The assurance given by B was adequate in view of what it was reasonable to require, and therefore A could not treat B’s failure to do more as a repudiation. B then has a claim against A for damages for total breach. Restatement 2d of Contracts § 251(e)

Question 128

A contracts to let B use his concert hall on the evening of May 7 for a performance by B’s string quartet, in return for B’s promise to perform and to pay A a percentage of the receipts. The contract provides that B is not discharged even if he is unable to transport his quartet to A’s hall. On May 6, because of an unexpected airline strike, A reasonably believes that B’s quartet will be unable to come the 3,000 miles necessary to perform in his hall as scheduled. A telephones B on May 6 and asks B to assure him that he will be there on May 7. B replies that he hopes to be able to charter a plane and that he will telephone A to let him know. A tells B that he must know by noon on May 7 in order to make alternative arrangements with C. B succeeds in chartering a plane and flies the 3,000 miles with his quartet. After he has arrived on the afternoon of May 7, he telephones A to assure him that he will perform. However, A had already by that point contracted with C to let C hold a meeting in the hall. Was there a repudiation? By whom? Does B have a claim against A?

Answer 128

A court may conclude that, as a result of B’s apparent inability to perform, A had reasonable grounds to believe that B would commit a breach by non-performance that would of itself have given A a claim for damages for total breach, that the assurances given by B were not within a reasonable time, and therefore that B properly treated B’s delay in giving them as a repudiation. A then has a claim against B for damages for total breach. Restatement 2d of Contracts § 251(e)

Question 129

On April 1, A, a subcontractor, contracts with B, a contractor, to furnish labor and materials for the floors of an apartment building that B is building. A is to begin work on May 1 and be paid 85% of the price in monthly payments as the work progresses and the balance on his completion of the work. On April 10, A discovers that B is insolvent and demands that B pay for the work in advance or give reasonable security. When B refuses to do so, A refuses to begin work on May 1. What claim, if any, does B have against A?

Answer 129

B has no claim against A. Restatement 2d of Contracts § 252(a)

Question 130

On February 1, A contracts to work for B as a salesman for a year beginning March 1, for a monthly salary and $5,000 to be paid in advance on February 15. On February 10, A becomes insolvent. B refuses to pay the $5,000 on February 15 unless A gives reasonable security. What claim, if any, does A have against B?

Answer 130

Because A’s insolvency did not give reasonable grounds to believe that A would commit a breach, A has a claim against B for damages. Restatement 2d of Contracts § 252(a)

Question 131

On April 1, A and B make a contract under which B is to work for A for three months beginning on June 1. On May 1, A repudiates by telling B he will not employ him. On May 15, B commences an action against A. Does B have a duty? What claim, if any, does B have against A?

Answer 131

B’s duty to work for A is discharged and he has a claim against A for damages for total breach. Restatement 2d of Contracts § 253(a)

Question 132

On July 1, A contracts to sell and B to buy a quantity of barrel staves, delivery and payment to be on December 1. On August 1, A repudiates by writing B that he will be unable to deliver staves at the contract price. On September 1, B commences an action against A. Does B have a duty? What claim, if any, does B have against A?

Answer 132

B’s duty to pay for the staves is discharged and he has a claim against A for damages for total breach. See Uniform Commercial Code § 2-610. Restatement 2d of Contracts § 253(a)

Question 133

On February 1, A and B make an option contract under which, in consideration for B’s payment of $100, A promises to convey to B a parcel of land on May 1 for $50,000, if B tenders that sum by that date. On March 1, A repudiates by selling the parcel to C. On April 1, B commences an action against A. What claim, if any, does B have against A?

Answer 133

Since A has not received the $50,000, the agreed exchange for his duty to sell the parcel to B, B has a claim against A for damages for total breach. Restatement 2d of Contracts § 253(c)

Question 134

On February 1, A and B make a contract under which, as consideration for B’s immediate payment of $50,000, A promises to convey to B a parcel of land on May 1. On March 1, A repudiates by selling the parcel to C. On April 1, B commences an action against A. What claim, if any, does B have against A?

Answer 134

Since A has received the $50,000, the agreed exchange for his duty to sell the parcel to B, B has no claim against A for damages for breach of contract until performance is due on May 1. Restatement 2d of Contracts § 253(c)

Question 135

On February 1, A and B make a contract under which, as consideration for A’s conveying a parcel of land to B, B promises to make annual payments of $10,000 for five years. B makes the payments for the first two years and on March 1 of the third year repudiates by telling A that he will not make any further payments. A commences an action against B. What claim, if any, does B have against A or A against B?

Answer 135

Since B has received the land, the agreed exchange for his duty to pay the remaining installments, A has no claim against B for damages for breach of contract until performance is due on the following February 1. Restatement 2d of Contracts § 253(c)

Question 136

On January 15, A and B make a contract under which A promises to convey to B a parcel of land on February 1, and B promises to pay A $10,000 at that time and the balance of $40,000 in four annual installments. A conveys the parcel to B and B pays A $10,000. On March 1, B repudiates by telling A that he will not make any further payments. A commences an action against B. What claim, if any, does A against B?

Answer 136

Since B has received the land, the agreed exchange for his duty to make the remaining payments, A has no claim against B for damages for breach of contract, until performance is due on the following February 1. Restatement 2d of Contracts § 253(c)

Question 137

On April 1, A and B make a personal service contract under which A promises to employ B for six months beginning July 1 and B promises to work for A during that period. On May 1, A repudiates the contract. On June 1, B falls ill and is unable to perform during the entire period. Does A have a duty?

Answer 137

A’s duty to pay B damages for total breach by repudiation is discharged. Restatement 2d of Contracts § 254(a)

Question 138

On April 1, A and B make a personal service contract under which A promises to employ B for 6 months beginning July 1 and B promises to work for A during that period. On May 1, B repudiates the contract. On June 1, B falls ill and is unable to perform during the entire period. Does B have a duty?

Answer 138

B’s duty to pay damages to A for his anticipatory repudiation is discharged. Restatement 2d of Contracts § 254(b)

Question 139

A, an insurance company, issues a policy insuring B against theft, and providing that no payment will be made unless written notice is given within 60 days after loss. A loss occurs, and B immediately notifies A by telephone. A repudiates by informing B without adequate reason that it will not pay the loss. Because of this, B does not give written notice to A. What claim, if any, does B against A?

Answer 139

B has a claim against A for the amount of the loss. Restatement 2d of Contracts § 255(a)

Question 140

On February 1, A contracts to sell and B to buy a house for $50,000, B’s duty being “conditional on approval by X Bank of B’s pending mortgage application.” On March 1, B repudiates by telling A that he will not buy the house. On March 10, the X Bank, which is unaware of B’s repudiation, disapproves B’s application on financial grounds. A has no claim against B. Is the non-occurrence of the condition excused?

Answer 140

The non-occurrence of the condition, approval by X Bank, is not excused because B’s repudiation did not contribute materially to its non-occurrence. Restatement 2d of Contracts § 255(a)

Question 141

A, a contractor, makes a contract with B, a subcontractor, under which B is to be paid $300,000 for furnishing heating and air conditioning units for a housing project to be built by A, “on condition that Contractor is furnished with a performance bond within two weeks.” No provision is made for progress payments. A week after the making of the contract, A repudiates by telling B that he will not perform the contract. Because of the repudiation, B does not furnish a performance bond. What claim, if any, does B against A? How might each non-occurrence of a condition by B be excused?

Answer 141

B has a claim against A for damages for total breach. The non-occurrence of one condition, B’s furnishing of a performance bond, is excused under this § 255 because A’s repudiation contributed materially to its non-occurrence. The non-occurrence of another condition, B’s furnishing heating and air conditioning units, is excused because B’s duty to furnish the units was discharged when A repudiated (§ 253(2)), and its performance was therefore no longer a condition under § 237. Restatement 2d of Contracts § 255(b)

Question 142

On February 1, A contracts to supply B with natural gas for one year beginning on May 1, payment to be made each month. On June 1, A repudiates and fails to supply gas under the contract. On June 2, before B has taken any action in response to the repudiation, A resumes the supply of gas and notifies B that he retracts his repudiation. What claims, if any, does B against A?

Answer 142

B has no claim against A based on the repudiation. B has a claim against A for damages for A’s breach by non-performance for one day. Whether B’s claim is one for damages for partial breach or for total breach is determined by the rule stated in § 243(1). Restatement 2d of Contracts § 256(a)

Question 143

On February 1, A contracts to supply B with natural gas for one year beginning on May 1, payment to be made each month. On March 1, A repudiates. On April 1, before B has taken any action in response to the repudiation, A notifies B that he retracts his repudiation. Does B have a duty? What claim, if any, does B against A?

Answer 143

B’s duties under the contract are not discharged, and B has no claim against A. Restatement 2d of Contracts § 256(a)

Question 144

On February 1, A contracts to supply B with natural gas for one year beginning on May 1, payment to be made each month. On March 1, A repudiates. On March 15, B makes a contract with C for the supply of gas to replace that which he was to receive from A. Does B have a duty? What claim, if any, does B against A?

Answer 144

B’s duties under the contract are discharged and B has a claim against A for damages for total breach (§ 253). Restatement 2d of Contracts § 256(c)

Question 145

On February 1, A contracts to supply B with natural gas for one year beginning on May 1, payment to be made each month. On March 1, A repudiates. On March 15, B notifies A that he cancels the contract. Does B have a duty? What claim, if any, does B against A?

Answer 145

B’s duties under the contract are discharged and B has a claim against A for damages for total breach (§ 253). Restatement 2d of Contracts § 256(c)

Question 146

On April 1, A contracts to sell and B to buy a parcel of land, delivery of the deed and payment of the price to be on July 30. On May 1, A sells the parcel to C and B learns of this. On June 1, before B has taken any action in response to the sale to C, A reacquires the land and B learns of this. Does B have a duty? What claim, if any, does B against A?

Answer 146

B’s duties under the contract are not discharged and B has no claim against A. Compare Illustrations 5 and 6 to § 250. Restatement 2d of Contracts § 256(c)

Question 147

A contracts to sell and B to buy a parcel of land for $50,000, delivery of the deed and payment of the price to be on July 1. On June 1, A repudiates the contract. B writes A urging him to perform, but A does not reply. B thereupon buys another parcel of land in its place and makes no conditional offer of the $50,000 on July 1. A, however, having changed his mind makes a conditional offer of a deed on July 1. What claim, if any, does B against A or A against B?

Answer 147

B has a claim against A for damages for total breach. A has no claim against B. Restatement 2d of Contracts § 257(a)

Question 148

A makes two contracts to sell identical cargoes of sugar to B, delivery under the first to be not later than July 1 and under the second not later than August 1. In June A delivers a conforming cargo of sugar, directing that it be applied to the second contract. Does A still have a duty?

Answer 148

A’s duty under that contract is discharged. Restatement 2d of Contracts § 258(a)

Question 149

A owes B two debts of $1,000 each, one secured and the other unsecured. A sends B $1,000 with a letter stating that the payment is to discharge the secured debt. B keeps the money but replies, “I shall apply your payment to the unsecured debt.” Which debt is discharged?

Answer 149

The secured debt is discharged. Restatement 2d of Contracts § 258(a)

Question 150

A owes B $1,000 for goods sold. He has also promised to pay B $1,000 that he lost to B at gambling, but his promise is unenforceable on grounds of public policy. A pays B $1,000, stating that it is in payment of his gambling losses. Which duty is discharged?

Answer 150

A’s duty to pay B $1,000 for goods sold is not discharged. Restatement 2d of Contracts § 258(a)

Question 151

A owes B two debts of $1,000 each, one secured and the other unsecured. A sends B $1,000 without a letter stating that the payment is to discharge the secured debt, but makes an entry in his account book crediting the payment to the secured debt. B keeps the money and replies, “I shall apply your payment to the unsecured debt.” Which debt is discharged?

Answer 151

Because A has not manifested his intention to B, his purported direction is ineffective. Under the rules stated in § 260, the unsecured debt is discharged. Restatement 2d of Contracts § 258(b)

Question 152

A makes two contracts to sell identical cargoes of sugar to B, delivery under the first to be not later than July 1 and under the second not later than August 1. A delivers no sugar until July 1, when he delivers a conforming cargo of sugar without saying anything about its application. Which duty is discharged?

Answer 152

In the absence of a contrary indication, the coincidence of the dates and the fact that application of the performance to the first contract will avoid breach sufficiently manifest A’s intention that it be so applied. A’s duty under that contract is discharged. Restatement 2d of Contracts § 258(b)

Question 153

A owes B two matured debts, one of $1,221, which will soon be barred by a statute of limitations, and the other of $1,193, which will not soon be barred. A pays B $1,193 with no further direction of its application. Which debt is discharged?

Answer 153

In the absence of a contrary indication, the coincidence of the amount of the payment and that of one of the debts sufficiently manifest A’s intention that the payment be applied to the $1,193 debt. The $1,193 debt is discharged. Restatement 2d of Contracts § 258(b)

Question 154

A contracts with B to build a building, to be completed free of liens. C obtains a mechanic’s lien on the building to secure payment for labor and materials that he has furnished under a subcontract with A. A owes C on other accounts as well as under this subcontract. A, on receiving progress payments from B, uses the money to pay C, and directs C, who knows its source, to apply it to the other accounts. Which duty is discharged?

Answer 154

If A is under no duty to B to use the progress payments in a particular way, A’s direction is effective regardless of C’s knowledge. A’s duty to pay the other accounts is discharged to the extent of the payments to C. Compare Illustration 1 to § 260. Restatement 2d of Contracts § 258(c)

Question 155

The facts being otherwise as stated above, the progress payments, as C knows, are paid pursuant to an agreement between A and B that they are to be used to discharge A’s duty to pay C for labor and materials on the building. Which duty is discharged? To what extent?

Answer 155

A’s direction is not effective and his duty to pay the other accounts is not discharged. A’s duty to pay C for the labor and materials is discharged to the extent of the payments to C. Restatement 2d of Contracts § 258(c)

Question 156

A owes B two matured debts, one of which is barred by a statute of limitations. A makes a payment to B without directing its application. How is B to apply the payment?

Answer 156

B can apply it to the barred debt and the debt is discharged to that extent. If the payment is insufficient to pay that debt in full, however, the bar of the statute is not removed as to the remainder. See § 82 and Comment e to that section. Restatement 2d of Contracts § 259(a)

Question 157

A owes B two matured debts, one of which is voidable because A was an infant when it was incurred. A makes a payment to B without directing its application. How is B to apply the payment?

Answer 157

B can apply it to the voidable debt and the debt is discharged to that extent. Restatement 2d of Contracts § 259(a)

Question 158

A owes B two matured debts, on one of which there is a surety. A makes a payment to B without directing its application. How is B to apply the payment?

Answer 158

B can apply it to the debt for which there is no surety and the debt is discharged to that extent. Restatement 2d of Contracts § 259(a)

Question 159

A owes B a matured debt and makes a payment without directing its application. The next day another debt from A to B matures. How is B to apply the payment?

Answer 159

B cannot apply the payment to the latter debt. The payment is applied to the former debt and it is discharged to that extent. Restatement 2d of Contracts § 259(a)

Question 160

A owes B three matured debts. On making a payment to B, A says, “You may apply this payment to either the first or the second of my debts.” How is B to apply the payment?

Answer 160

If B applies the payment to either the first or the second debt, A’s duty is discharged to that extent. An attempt by B to apply the payment to the third debt would be ineffective, and its application as between the first and second debts would be determined by the rules stated in § 260. Restatement 2d of Contracts § 259(a)

Question 161

A owes B two matured debts of $1,000 each. A pays B $1,000 without directing its application. B promptly credits the payment in his books to one of the debts. Is B’s purported application of the payment effective?

Answer 161

Because B has not manifested his intention to A, his purported application is ineffective. The application of the payment is determined by the rules stated in § 260. However, if promptly after payment B sends A a letter demanding payment of one of the debts, this is a manifestation to A of B’s intention to apply the payment to the other debt. Restatement 2d of Contracts § 259(b)

Question 162

A owes B two matured debts, one of which is for rent under a lease providing that A’s rights as lessee are forfeit for non-payment of rent. A makes a payment to B sufficient to pay the debt for rent without directing its application. B notifies A that he has applied it to the other debt. Is B’s purported application of the payment effective?

Answer 162

B’s purported application is ineffective and the other debt is not discharged. Under the rules stated in § 260, the payment is applied to the debt for the rent and it is discharged. Restatement 2d of Contracts § 259(c)

Question 163

A owes B two matured debts of $1,000 each, one of which A has consistently disputed. A pays B $1,000 without directing its application. B notifies A that he has applied it to the disputed claim. Is B’s purported application of the payment effective?

Answer 163

B’s purported application is ineffective, and the disputed debt is not discharged. Under the rules stated in § 260, the payment is applied to the other debt and it is discharged. Restatement 2d of Contracts § 259(c)

Question 164

A owes B two matured debts, on one of which no interest is due because the note representing it is usurious. A makes a payment to B without directing its application. B notifies A that he has applied it to the payment of interest on the debt represented by the usurious note. Is B’s purported application of the payment effective?

Answer 164

B’s purported application is ineffective. The application of the payment is determined by the rules stated in § 260. Restatement 2d of Contracts § 259(c)

Question 165

A owes B two matured unsecured debts, one for $1,000 in B’s own right and one for $2,000 on a contract made by A with B, who was acting for C, an undisclosed principal. A makes a $900 payment to B without directing its application. How is B to apply the payment?

Answer 165

B must apply no less than $600 to the debt arising out of the agency contract. To the extent that he does not, his application is not effective. The debt arising out of the agency contract is then discharged to the extent of $600 under the rules stated in § 260. Restatement 2d of Contracts § 259(d)

Question 166

A owes B two matured debts of $1,000 each, one of which A has consistently disputed. A pays B $1,000 without directing its application. B notifies A that he has applied it to the disputed claim. A does not reply for six months after he receives B’s statement. Is B’s application validated? Is either debt discharged or not?

Answer 166

B’s application is validated. The disputed debt is discharged and the other debt is not discharged. Restatement 2d of Contracts § 259(e)

Question 167

A contracts with B to build a building. To secure A’s payment for labor and materials, A gives B a surety bond that is enforceable against the surety by laborers and materialmen. A uses the progress payments that he receives from B to pay C, whom he owes for other materials as well as for materials for the building. Neither A nor C exercises his power of application as to these payments. To what are the payments to be applied?

Answer 167

The payments are applied to the debts for materials for the building because A owes a duty to the surety on the bond, who has a right of exoneration against A, to pay that debt. The result does not depend on whether C knew or had reason to know the source of the money used as payment. Compare Illustrations 7 and 8 of § 260 to § 258. Restatement 2d of Contracts § 260(b)

Question 168

A owes B several matured interest-bearing debts, on all of which interest is overdue. A makes a payment as to which neither A nor B exercises his power of application. To what is the payment to be applied?

Answer 168

The payment is applied to interest on all of the debts before it is applied to the overdue principal of any one. Restatement 2d of Contracts § 260(c)

Question 169

A owes B two matured debts, one of which is secured by collateral belonging to the debtor. A makes a payment as to which neither A nor B exercises his power of application. To what is the payment to be applied?

Answer 169

The payment is applied to the unsecured debt even though it matured later. Restatement 2d of Contracts § 260(c)