Contract 31-38 Flashcards
What is a waiver, and when are conditions waived?
A voluntary and intentional relinquishment of a contract right by words or conduct (performance is excused when waived).
Condition is waived when:
A party indicated through words/conduct that a condition DOES NOT need to be satisfied; AND
The other party detrimentally relies on that waiver.
Priority: HIGH
How is good faith defined under the UCC?
Good faith is defined as:
Honesty in fact; AND
The observance of reasonable commercial standards of fair dealing.
*Every contract contains an implied obligation of good faith and fair dealing.
Priority: Low
Impossibility vs. Impracticability
Impossibility: Performance is discharged because of (a) the death/physical incapacity of a necessary person; (b) an unanticipated destruction of the necessary subject matter; OR (c) when a new law/regulation makes performance extremely and unreasonably difficult/expensive.
Impracticability: When an event occurs after contract formation, making performance extremely and unreasonably difficult/expensive.
Priority: HIGH
When is performance excused under the Frustration of Purpose Doctrine?
When the purpose of the contract no longer exists IF:
A party’s principal purpose is substantially frustrated without his fault;
By an unforeseeable supervening event out of their control; AND
Both parties knew the purpose at the time of formation.
Priority: HIGH
Performance
Material Breach
vs.
Minor Breach
Material: WILL excuse the non-breaching party’s performance. It occurs when a party does not render substantial performance.
Minor: WILL NOT excuse performance (the non-breaching party must perform, though they may bring a separate action for damages resulting from the breach).
Priority: HIGH
How do courts determine whether a breach is material?
They will consider:
The extent of the benefit deprived to the injured party;
The adequacy of compensation for loss to the non-breaching party;
The extent the breaching party will suffer forfeiture;
The likelihood that the breaching party will cure; AND
Absence of good faith and fair dealing by the breaching party.
Priority: HIGH
What is a time is of the essence clause?
It requires performance by a specific date, where failure to perform by said date is deemed a material breach.
Without this clause, failure to perform by a specified date is usually NOT deemed a material breach.
Priority: Medium
When is a contract divisible?
When:
The performances to be exchanged can be divided into corresponding pairs of part performances,
In a way that the elements of each pair will be treated as if the parties had agreed they were equivalents.
*Both elements MUST be satisfied.
Priority: N/A
