Conditions

Question 1

Two kinds of conditions

Answer 1

1. Express

2. Implied

Question 2

Examples of language of express condition

Answer 2

“only if” “provided that” “on the condition that”

Question 3

How strictly do express conditions need to be satisfied?

Answer 3

VERY STRICTLY! unless the condition is excused

Question 4

How do we determine if satisfaction contracts (a kind of express condition) have been…satisfied?

Answer 4

Preferred approach is objective - if most reasonable people would be satisfied, then the condition is met

BUT Aesthetic taste (art, tutoring services) will be measured via SUBJECTIVE!

Question 5

Can a buyer breach a satisfaction contract based on aesthetic taste?

Answer 5

YES, if they claim dissatisfaction in bad faith

Question 6

Can an express condition be waived?

Answer 6

Yes, two ways:

1. The party who the condition protects can waive it via words or conduct
2. The condition can be eliminated if the party whom it protects (?) wrongfully interferes with or hinders the occurrence of the condition. (Judged by good faith standard)

Question 7

Constructive Condition of Exchange (implied condition)

Answer 7

One party’s performance is conditioned on the other sides’ performance (contracts are equal)

Question 8

Constructive Condition of Exchange in Common Law

Answer 8

Does NOT need to be perfectly satisfied

Doctrine of substantial performance rules - CCE is satisfied as long as there is not a WILLFUL, MATERIAL BREACH

Question 9

If a breach is not material such that payment still has to be exchanged, can the non-breaching party recover damages?

Answer 9

YES!

Usually cost to complete the performance but sometimes limited to diminution in market value

Question 10

Can a breaching party (material breach, fails to satisfy CCE) get paid?

Answer 10

Not on the contract

Perhaps via quasi-contract?

Question 11

Can a breaching party who fails to satisfy an EXPRESS condition get paid

Answer 11

NO - not on the contract OR via quasi-contract

Question 12

Can a contract be broken down into mini-contracts for the purposes of determining substantial performance?

Answer 12

yes, if clearly divisible

Question 13

What does the UCC say about the Constructive Condition of Exchange?

Answer 13

Must be PERFECT!! Perfect goods, perfect delivery. No substantial performance here

Question 14

2 exceptions to the Perfect Tender Rule

Answer 14

1. Installment contracts

2. Parties can contractually change the default rules to substantial performance

Question 15

If tender isn’t perfect, what are the buyer’s options?

Answer 15

Accept some, all, or none!

Question 16

Can a buyer revoke an acceptance?

Answer 16

Yes, if defect is discovered within a reasonable time

Question 17

Is there a chance to cure if the seller fails to tender perfect goods?

Answer 17

Yes, IF

1. There is time left on the K
2. OR seller had reasonable grounds to belive the buyer would accept a replacement

Question 18

Can a buyer reject something delivered as part of an installment contract? (remember, no perfect tender rule!)

Answer 18

Yes, but only when there is a SUBSTANTIAL IMPAIRMENT in the installment that CANNOT be cured (lower standard)

Question 19

Shipment Contract

Answer 19

Seller must do 3 things:

1. Get the goods to a common carrier
2. Make arrangements for delivery
3. Notify the buyer

RISK OF LOSS = Buyer

Question 20

Destination Contract

Answer 20

Seller must actually GET the goods to the buyer’s business

RISK OF LOSS = Seller

Question 21

4 steps for a risk of loss problem

Answer 21

1. Does the contract address risk of loss?
2. If no, has either party breached? If yes, breaching party bears the risk of loss (even if completely unrelated to delivery)
3. If no breach, then go through shipment/destination rules.
4. If there’s no shipping, merchant analysis. If the seller is a merchant, they keep the risk of loss until the buyer RECEIVES the goods. If not a merchant, risk of loss moves to buyer when the goods are tendered.