Conditions Flashcards
conditions
are part and parcel of a contract
is a condition occurs or does not occur as the case may be, a party or parties may have an excuse for nonperformance of the contract
condition precedent
condition must occur before a duty to perform arises (e.g. in real estate contract, the buyers performance is conditioned on the buyer obtaining financing. thus the financing must precede the obligation to perform on the sale and purchase contract)
condition subsequent
the happening of the condition terminates an existing duty to perform
implied in fact conditions
a condition which is implied from the conduct of the parties
implied in law conditions
the law implies a condition of performance from the circumstances
aka concurrent condition
discharge by performance
this is the most common method of discharge of a contract
most contracts are discharged (end) by performance of the parties i.e. the parties do everything they contractually promised to do
material breach
common law - under common law, only a material (serious) breach of contract will discharge the non breaching party from performance of the contract. a nonmaterial breach will only allow for the deduction of damages, and not operate as a complete excuse for nonperformance
UCC - under the UCC however, the perfect tender rule provides that every breach of contract is material and thus operates s a complete excuse for nonperformance on the part of the non breaching party
UCC exceptions to the perfect tender rule
a) cure - the time for performance has not yet arrived and the breaching party can correct the defect and perform within the time remaining (time left on the clock)
b) accommodation shipments - seller sends substitute goods that the seller believes the buyer would reasonable accept. if the buyer rejects the goods as being unacceptable, seller will be given a further reasonable time to perform
c) installment contracts - parties understand that the goods are not to be delivered in one lot or shipment
what must accompany an accommodation shipment
accommodation letter
prevention of performance
if one party prevents the other from performing, the party whose performance has verb prevented will be discharged from performance
anticipatory repudiation
a doctrine which holds that if a party repudiates a contract in advance (anticipation) of the due date the non breaching party may
(1) notify the breaching party that the repudiation is taken as being final (or notify the breaching party that the non breaching party has changed his position e.g. entered into another contract in reliance on the repudiation) and immediately sue on breach of contract
(2) wait for performance on the due date, and if performance does not occur, sue at that time
the risk of waiting for performance
is that the repudiating party might retract his repudiation, thus making the original non breaching party liable for damages if he does not let the retracting party perform
discharge by breach
material breach
prevention of performance
anticipatory repudiation
mutual rescission
a contract to end a contract, therefore all of the elements of a contract must be present
accord and satisfaction
an agreement to accept a lesser performance in satisfaction of the original contract
novation
new contract in which a new obligor is substituted for a previous obligor
all three parties must be parties to the agreement
discharge by agreement of the parties
mutual rescission
accord and satisfaction
novation
discharge by operation of law
impossibility subsequent illegality destruction of subject matter bankruptcy statute of limitations
impossibility
must be objective impossibility not subject impossibility
1) frustration of purpose
(2) commercial impracticability (UCC
frustration of purpose
treated like impossibility
the purpose of the contract has been frustrated through no fault of the parties
even though the contract is not incapable of performance, its purpose has been frustrated, and thus the court will discharge the contract
commercial impracticability (UCC)
the contract can only be performed at a greatly excessive cost
although performance is not impossible, it will be treated as such if external events cause the contracts performance to increase drastically
subsequent illegality
the contract has become illegal because of a change in the law
a contract which was legal when made is now illegal because of a change in the law (Prohibition)
destruction of subject matter
subject matter of the contract no longer exists or is no longer available
bankruptcy
discharges MOST contractual obligations
statute of limitations
time period in which to bring the lawsuit has expired
