Conditions Flashcards
What is a condition? (Restatement 224)
A condition is an event not certain to occur, which must occur, before performance obligation is due.
Anticipatory Repudiation
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.
Types of Conditions
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”
Order of Performance (Types)
Independent
Dependent
Mutual
(Both express and implied)
Independent Condition
No connection between performance obligation from the other
Dependent Condition
1 performance depends on another to perform
Mutual Condition
- 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)
Separate K’s
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)
What does a failure of a condition do?
excuses the performance obligation
Is time a condition?
NO, the mere passage of time is not a condition! Because passage of time is certain and will happen.
Examples of obligations (words)
- required
- must
- shall
- promise
- mandatory
Satisfactory Clauses
- 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
Mitigating Doctrine
- 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)
Effect of condition vs. effect of covenant (promise)
Failure of a condition excuses performance obligation of parties
- failure of a covenant (promise): is a breach
Effect of condition vs. effect of covenant (promise)
Failure of a condition excuses performance obligation of parties
- failure of a covenant (promise): is a breach
Tender of Delivery
a condition to the buyer’s duty to accept the goods to pay for them
Tender of Payment
a condition to the seller’s duty to tender and complete any delivery
Substantial Performance
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
Old Rule with substantial performance
When language was absent in K, then performance must be completed before payment
Divisibility
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.
Perfect Tender Rule (2-601)
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.
how to deteremine Material breach of K
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.
Injured Party options
has an option to treat entire k as a breach or
to treat breach as partial and seek remedies for that party of breach
Parties have a duty to do what?
1) to cooperate, act in good faith with each other and
2) mitigate damages.
Can an oblgiee get adequate assurances?
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
Can repudiation be retracted?
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.
Tender of delivery
is a condition to the buyers duty to accept the goods and to pay for them
Tender of payment
a condition to the seller’s duty to tender and complete any delivery
What is the significance with payment plans and divisibility?
Just because k is with payments does not make it severable.
- Construction K is presumption of an entire K. Not severable
Predominate Factor Test
see what K is mostly made up of to determine “good” (ucc) or “service” (CL)
