Conditions, Breach, and Repudiation Flashcards
Definition of Condition
An event or non-event that must occur before performance is due
Result of failure of condition
Contract is voidable - thus if we start changing terms then these are counteroffers
Conditions v Promises
Promises are broader and do not void a contract (courts see conditions are drastic); if a court is unsure if it’s a promise or condition, typically say it is a promise (and you could sue for damages, but not void contract) – NOTE: this should incorporate Interpretation (above) and the rules – this is codified in §227 “interpretation preferred that will reduce risk of forfeiture” (aka voiding)
Event that Terminates a Duty (formerly called condition subsequent)
§230 says events can cancel duties UNLESS either (a) not in good faith OR (b) impracticable
Condition of Personal Satisfaction
if only aesthetic, watch out – probably cannot void this; typically courts try to find an objective standard (like an architect etc) and will use this if the architect or other expert is acting in good faith. But if its entirely subjective than this condition will hold. Ex of I don’t like this self-portrait and I am not paying -> you can do this §228
Types of conditions
Express Conditions: Either in writing or through actions
Implied Conditions: Sometimes called implied-in-fact Ex) the concert I am renting will exist on rental date (some courts can construe actions as implied-in-fact conditions)
Constructive Conditions: Court decides to read in a condition
Common condition - order of performance
Typically the person whose task takes the longest should start first – ex) if you are building my house a common constructed condition is that payment due at completion
Pay-if paid vs pay-when paid
example of promise (pay-when paid) vs condition (pay-if paid)
Severability
Whatever provision of a contract cannot be enforced can be CUT OUT of the contract
Severability clause
most contracts have a clause saying it is severable (explicitly)
Agreed Equivalents (Restatement §183)
“agreed equivalents” of pairs of performances is allowed as long as it (a) does not violate public policy and (there is no serious misconduct)
Partially performance as agreed equivalents
if task is partially performed, court can sever performance off and enforce the other half of as a pair of duties
Installment Contract
UCC Severability - UCC - §2-612 –(1) even if agreement explicitly states “each delivery is separate contract” UCC will treat as an installment contract (2) may reject non-conforming goods BUT if seller gives assurance of cure they must accept installment (3) HOWEVER, if the value of the contract is decreased because non-conformity (Ex. does not send the motherboards) can reject UNLESS the aggrieved party accepts the goods without seasonable notification, or the issue is with prior accepted installments or future installments (aka not the installment at issue here)
Types of breaches
(1) Total and material breach – Remedy: (a) withhold payment (b) terminate contract (c) sue for damages
(2) Material breach – Remedy: (a) suspend performance (b) wait for cure (C) sue for damages
(3) Immaterial breach – Remedy: sue for damages
How do I know if breach is material?
5 factors - see §241 – (1) deprivation of reasonably expected benefit (2) extent to which compensation is possible (3) risk of forfeiture (4) likelihood of curing (5) whether it was in good faith. THUS, if the breach deprives other party of reasonable benefits, compensation is possible, it goes to the heart of the contract, the other party is unlikely to cure, and it was in bad faith -> DEF a material breach
