Conditions

Question 1

What is a condition? (Restatement 224)

Answer 1

A condition is an event not certain to occur, which must occur, before performance obligation is due.

Question 2

Anticipatory Repudiation

Answer 2

An announcement of intention not to perform (statement by 1 party to another party), which is positive and unequivocal.
Threatened breach has to be material or total

An injured party has a right to sue immediately or wait until date of performance

• injured party allowed commercially reasonably amount of time to sue now or later.

Question 3

Types of Conditions

Answer 3

Precedent: Activates performance obligation
(must occur before performance obligation is to occur)

Subsequent: terminates performance obligation
- Ex: Child support “I will pay until child reaches 18 years old”

Question 4

Order of Performance (Types)

Answer 4

Independent
Dependent
Mutual

(Both express and implied)

Question 5

Independent Condition

Answer 5

No connection between performance obligation from the other

Question 6

Dependent Condition

Answer 6

1 performance depends on another to perform

Question 7

Mutual Condition

Answer 7

• make each party’s duty of performance constructively conditional upon the others substantial performance of all previous duties.
• Both parties must be ready willing and able to perform

(courts presume this)

Question 8

Separate K’s

Answer 8

Breach of 1 K is not usually breach of a 2nd K unless parties condition breach of 1 is a breach of a 2nd
(Cross Default Provision)

Question 9

What does a failure of a condition do?

Answer 9

excuses the performance obligation

Question 10

Is time a condition?

Answer 10

NO, the mere passage of time is not a condition! Because passage of time is certain and will happen.

Question 11

Examples of obligations (words)

Answer 11

• required
• must
• shall
• promise
• mandatory

Question 12

Satisfactory Clauses

Answer 12

• Objective: commercial value or quality or operative fitness, or mechanical utility
• Subjective: fancy, taste, or judgment

(Requires good faith) You have to honestly dissatisfied
Ex: painting

-3rd party: Honest disatisfaction
(like subjective)
Ex: Architect inspection

Question 13

Mitigating Doctrine

Answer 13

• Prevention: If party intervenes with performance no performance obligation
• Waiver: before the event, Can be retracted, but not if reliance.
• Estoppel: Cannot retract waiver if relied to your detriment

-Election: disregard nonoccurrence of event
(After event)

Question 14

Effect of condition vs. effect of covenant (promise)

Answer 14

Failure of a condition excuses performance obligation of parties

• failure of a covenant (promise): is a breach

Question 15

Effect of condition vs. effect of covenant (promise)

Answer 15

Failure of a condition excuses performance obligation of parties

• failure of a covenant (promise): is a breach

Question 16

Tender of Delivery

Answer 16

a condition to the buyer’s duty to accept the goods to pay for them

Question 17

Tender of Payment

Answer 17

a condition to the seller’s duty to tender and complete any delivery

Question 18

Substantial Performance

Answer 18

Only applies to CL.
- Whether essential part of K has been satisfied. (Reasonable person Std)

• Only applies where innocent, trivial mistake not intentional.
• Work must be substantially performed before payment can be demanded

Question 19

Old Rule with substantial performance

Answer 19

When language was absent in K, then performance must be completed before payment

Question 20

Divisibility

Answer 20

If the part to be performed by one party consists of several and distinct items, and the price to be paid by the other is

1) apportioned to each item to be performed, or
2) left to be implied by law, such a contract will generally be held to be severable.
- Parties must state explicitly that the contract is entire if they do not want divisibility.

Question 21

Perfect Tender Rule (2-601)

Answer 21

Applies to goods, Goes to quality and quantity

If it goods or the tender of delivery fail in any respect to conform to the contract, the buyer may

1) reject the whole
2) accept the whole or
3) accept any commercial unit or units and reject the rest

Seller has an opportunity to cure the defective performance so long as K has not expired.

Question 22

how to deteremine Material breach of K

Answer 22

1) The extent to which the injured party will be deprived of the benefit which he reasonably expected;
2) The extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
3) The extent to which the party failing to perform or to offer to perform will suffer forfeiture;
4) The likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances;
5) The extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.

Question 23

Injured Party options

Answer 23

has an option to treat entire k as a breach or

to treat breach as partial and seek remedies for that party of breach

Question 24

Parties have a duty to do what?

Answer 24

1) to cooperate, act in good faith with each other and

2) mitigate damages.

Question 25

Can an oblgiee get adequate assurances?

Answer 25

Yes.
1) Where reasonable grounds arise to believe that the obligor will commit a breach by non-performance, the obligee may demand adequate assurances of due performance.
( must be reasonable grounds for insecurity)

2) the obligee may treat as a repudiation the obligor’s failure to provide with reasonable time such assurance of due performance

Question 26

Can repudiation be retracted?

Answer 26

Yes.
The repudiator has the power of retraction prior to any change of position by the other party, but not afterwards.

• Can withdrawal repudiation prior any tie before other party acted or relied upon repudiation.

Question 27

Tender of delivery

Answer 27

is a condition to the buyers duty to accept the goods and to pay for them

Question 28

Tender of payment

Answer 28

a condition to the seller’s duty to tender and complete any delivery

Question 29

What is the significance with payment plans and divisibility?

Answer 29

Just because k is with payments does not make it severable.

- Construction K is presumption of an entire K. Not severable

Question 30

Predominate Factor Test

Answer 30

see what K is mostly made up of to determine “good” (ucc) or “service” (CL)