Contract Law AMP - Conditions Flashcards
Under the doctrine of substantial performance, can one party recover damages for the other party’s incomplete performance?
A Yes, that party will be able to deduct any damages suffered due to the incomplete performance
B No, because the doctrine of substantial performance was adopted to avoid the harsh result that could occur if complete performance was required
C Yes, but only if the breach was material
D No, unless the other party’s breach was willful
A
Under the doctrine of substantial performance, even though the party who has substantially performed is able to enforce the contract, the other party will be able to mitigate by deducting damages suffered due to the first party’s incomplete performance. The doctrine of substantial performance applies only if the breach is minor. If the breach is material, the performance is not considered substantial, and the party is in breach. Damages could be recovered for a material breach—but not under the doctrine of substantial performance. Similarly, if the performing party’s breach was willful, most courts will not apply the substantial performance doctrine. A willful breach would be considered a standard breach of contract, and the regular damages rules would apply. While it is true that the doctrine of substantial performance was adopted to avoid the harsh result that could occur if complete performance were required, this does not preclude the nonbreaching party from also recovering any damages suffered due to the other party’s incomplete performance. It just means that the nonbreaching party has a duty to perform in spite of the incomplete performance. QUESTION ID: K0085B Additional Learning
In the case of an anticipatory repudiation, the nonrepudiating party __________.
A must continue his own performance until the date of performance and then may sue
B must sue immediately or the repudiation is deemed waived
C may suspend his own performance, but must wait until the date performance is due to sue
D may sue immediately or wait until the date performance is due to sue
D
In the case of an anticipatory repudiation, the nonrepudiating party has several alternatives. He may sue immediately or wait until the date performance is due to sue.The nonrepudiating party may choose to suspend his own performance, but he need not wait until the date performance is due to sue.Even if the nonrepudiating party does not sue immediately, the repudiation is not deemed waived, because the nonrepudiating party can choose to wait until the date performance is due to sue.The nonrepudiating party may choose to suspend his performance immediately. There is no need for him to continue his own performance until the date of performance and then sue.QUESTION ID: K0082 Additional Learning
__________ best describes the primary difference between excuse of condition by prospective unwillingness to perform and excuse of condition by anticipatory repudiation because _____________.
A Nothing; the terms can be used interchangeably.
B Finality; prospective unwillingness to perform can be retracted if at any time prior to performance the defaulting party regains his ability or willingness to perform, whereas anticipatory repudiation is final and automatically serves to excuse the condition.
C Degree of certainty; prospective unwillingness to perform is based on the other party’s perception that a party will be unwilling or unable to perform when performance is due, whereas anticipatory repudiation occurs when a party clearly indicates his own unwillingness to perform before performance is due.
D Timing; prospective unwillingness to perform occurs when a party refuses to perform when performance is due, whereas anticipatory repudiation occurs when a party indicates an unwillingness to perform before performance is actually due.
C
The primary distinction between anticipatory repudiation and prospective inability to perform is one of degree of certainty. Anticipatory repudiation occurs when a party to a contract, prior to the time set for performance, indicates that he will not perform when performance is due. Prospective unwillingness to perform occurs when a party has reasonable grounds to believe that the other party will be unable or unwilling to perform when performance is due. Hence, the terms are not interchangeable; prospective inability or unwillingness to perform is not an anticipatory repudiation because such a repudiation must be unequivocal, whereas prospective failure to perform involves conduct or words that merely raise doubts that the party will perform. Both excuse of condition by prospective unwillingness to perform and excuse of condition by anticipatory repudiation involve similar timing, because both occur before the time of performance. Generally speaking, neither excuse of condition by prospective unwillingness to perform nor excuse of condition by anticipatory repudiation is final. Both can be retracted before the time of performance so long as the other party has not changed position in reliance on the prospective failure or anticipatory repudiation. QUESTION ID: K0084A Additional Learning
When a party having the benefit of an ancillary condition under a contract indicates by words or conduct (and without receiving any additional consideration) that she will not insist on that condition being met, this is called __________.
A a discharge
B an excuse
C a gift
D a waiver
D
When a party having the benefit of an ancillary condition under a contract indicates by words or conduct that she will not insist on that condition being met, courts, in certain circumstances, will enforce that party’s decision, despite the lack of additional consideration, as a waiver of the condition. No consideration is generally required for the waiver of an ancillary, or collateral, condition. In contrast, one cannot simply waive a condition regarding the main subject of a contract without receiving additional consideration. This would amount to a new undertaking that is really a gift in the disguise of a waiver. Without a waiver of the condition, nonfulfillment of the condition normally will excuse the other party’s duty to perform that was subject to the condition. When a party is under an immediate duty to perform, the duty to perform must then be discharged, normally by performance. QUESTION ID: K0086C Additional Learning
What is a “constructive” condition?
A A contractual provision providing that the contract is not effective unless some event occurs or fails to occur
Incorrect
B A condition commonly found in construction contracts stating that the condition of complete performance may be excused if the party has rendered substantial performance
C A condition that is implied by a court even though it is not explicitly stated in the contract
D A contractual provision providing that a party does not have a duty to perform unless some event occurs or fails to occur
C
A constructive condition is a condition that is implied by a court even though it is not explicitly stated in the contract. Common examples of constructive conditions are the conditions of cooperation and notice. Constructive conditions are also known as implied conditions. In contrast, an express condition precedent is an explicit contractual provision providing that a party does not have a duty to perform unless some event occurs or fails to occur. When an entire contract is not effective unless some event occurs or fails to occur, the contract is subject to an express condition precedent, not a constructive condition. The concept of substantial performance was developed in construction cases to avoid the harsh results that could occur when complete performance is required. Under the doctrine of substantial performance, the condition of complete performance may be excused if the party has rendered substantial performance. QUESTION ID: K0079B Additional Learning
An anticipatory repudiation __________.
A Should be in writing to satisfy the Statute of Frauds
B Must be unequivocal
C Can be based on positive statements or expressions of doubt or fear
B
An anticipatory repudiation stems from the words or conduct of the promisor indicating that he cannot or will not perform when the time comes. An anticipatory repudiation must be unequivocal. An anticipatory repudiation must be a positive statement that the repudiating party will not perform when performance is due. It cannot be based on expressions of doubt or fear, although those statements could establish a prospective inability to perform. There is no requirement that an anticipatory repudiation should be in writing. An anticipatory repudiation can stem from the words or conduct of the promisor. QUESTION ID: K0081B Additional Learning
In the case of an anticipatory repudiation, the nonrepudiating party:
A Must immediately either sue or urge the promisor to perform, or else will be deemed to have waived the repudiation
B Must sue immediately or else will be deemed to have waived the repudiation
C May sue immediately or choose to wait until the performance date to sue
D Must wait until the performance date to sue because before that time no breach has occurred
C
Anticipatory repudiation occurs if a promisor, prior to the time set for performance of his promise, indicates that he will not perform when the time comes. In the case of an anticipatory repudiation, the nonrepudiating party may sue immediately or choose to wait until the performance date to sue. In fact, the nonrepudiating party has four basic alternatives: (i) treat the anticipatory repudiation as a total repudiation and sue immediately; (ii) suspend his own performance and wait to sue until the performance date; (iii) treat the repudiation as an offer to rescind and treat the contract as discharged; or (iv) ignore the repudiation and urge the promisor to perform. By urging the promisor to perform, the nonrepudiating party will not be deemed to have waived the repudiation. He can still sue for breach and is excused from performing unless the promisor retracts the repudiation. QUESTION ID: K0082B Additional Learning
In a case of anticipatory repudiation, how long does the repudiating party have to retract the repudiation?
A No amount of time, because by definition an anticipatory repudiation is final and cannot be retracted
B Until performance is due, regardless of the other party’s actions
C Until performance is due, unless the other party has materially changed position in reliance on the repudiation
D 10 days
C
A repudiating party may retract his repudiation at any time until performance is due, unless the other party has materially changed position in reliance on the repudiation, or otherwise indicated that she considers the repudiation final. Withdrawal of the repudiation may be in any manner that clearly indicates intention to perform, but must include any assurances justifiably demanded. The other party’s actions in response to the anticipatory repudiation are important. If the other party has not changed position in reliance on the repudiation, the repudiation is not final and can be retracted until the time performance is due. There is no set period of time, such as 10 days, within which the repudiating party must retract the repudiation. The time for retraction depends on the terms of the contract. QUESTION ID: K0083B Additional Learning
Nonfulfillment of a condition __________.
A will excuse a duty to perform that was subject to the condition
B will result in a breach of contract
C gives rise to liability for nonperformance
D does not excuse the other party’s duty to perform under the contract
A
Nonfulfillment of a condition normally will excuse a duty to perform that was subject to the condition. A condition is a provision the fulfillment of which creates or extinguishes a duty to perform under a contract, thus nonfulfillment of a condition will excuse the other party’s duty to perform under the contract. Nonfulfillment of a condition is not a breach of contract and does not give rise to liability for nonperformance. QUESTION ID: K0077 Additional Learning
When a party indicates that she is “waiving” a condition before it is to happen, and the person addressed detrimentally relies on the waiver, a court will hold this to be __________.
A An anticipatory repudiation
B A prospective unwillingness to perform
C An election waiver
D An estoppel waiver
D
When a party indicates that she is “waiving” a condition before it is to happen, and the person addressed detrimentally relies on the waiver, a court will hold this to be an estoppel waiver. When a condition is not satisfied or a duty of performance is broken, and the beneficiary of the condition or duty nevertheless chooses to continue under the contract, a court will hold this to be an election waiver. An election waiver does not require estoppel (although estoppel elements are often present). A prospective unwillingness to perform occurs when one party has reasonable grounds to believe that the other party will be unable or unwilling to perform when performance is due. The effect of this prospective failure would be to allow the seller to suspend further performance until she receives adequate assurances that the buyer’s performance will be forthcoming. If the buyer does not provide adequate assurances, the seller can treat this as a repudiation of the contract. Anticipatory repudiation occurs when a promisor, prior to the time set for performance of his promise, indicates that he will not perform when the time comes. QUESTION ID: K0086A Additional Learning
A condition that cuts off an already existing absolute duty of performance is also known as __________.
A a condition concurrent
B a condition by hindrance
C a condition precedent
D a condition subsequent
D
A condition subsequent is one the occurrence of which cuts off an already existing absolute duty of performance. A condition precedent is one that must occur before an absolute duty of immediate performance arises in the other party. Conditions concurrent are those that are capable of occurring together, and that the parties are bound to perform at the same time. There is no condition by hindrance. A hindrance occurs when a party having a duty of performance that is subject to a condition prevents the condition from occurring. In such a case the condition will be excused if such prevention is wrongful. QUESTION ID: K0078 Additional Learning
Anticipatory repudiation occurs when:
A A party to a contract, prior to the time set for performance, indicates that he will not perform when performance is due
B A party to a contract has reasonable grounds to believe that the other party will be unable or unwilling to perform when performance is due
C A party to a contract indicates that she is waiving a condition of the contract and the other party to the contract detrimentally relies on that waver
D The beneficiary of a broken condition of a contract chooses to continue on under the contract despite the broken condition
A
Anticipatory repudiation occurs when a party to a contract, prior to the time set for performance, indicates that he will not perform when performance is due. Prospective failure of condition occurs when a party has reasonable grounds to believe that the other party will be unable or unwilling to perform when performance is due. Prospective inability or unwillingness to perform is not an anticipatory repudiation because such a repudiation must be unequivocal, whereas prospective failure to perform involves conduct or words that merely raise doubts that the party will perform. An estoppel waiver occurs when a party to a contract indicates that she is waiving a condition of the contract and the other party to the contract detrimentally relies on that waiver. An election waiver occurs when the beneficiary of a broken condition chooses to continue on under the contract despite the broken condition. QUESTION ID: K0081A Additional Learning
Can a repudiating party retract his anticipatory repudiation before his performance is due?
A Yes, if there has been a material change in circumstances since the repudiation.
B No, unless the other party agrees to the retraction.
C Yes, unless the other party has materially changed her position in reliance on the repudiation.
D No, an anticipatory repudiation is considered final.
C
A repudiating party may at any time before his next performance is due withdraw his repudiation, unless the other party has canceled, materially changed her position in reliance on the repudiation, or otherwise indicated that she considers the repudiation final. Withdrawal of the repudiation may be in any manner that clearly indicates intention to perform, but must include any assurances justifiably demanded. It is not necessary that there has been a material change in circumstances since the repudiation. If anything, such a change would make it more likely that the repudiating party would not be allowed to withdraw the repudiation, because the other party is likely to have also materially changed her position in reliance on the repudiation. If the other party has not so relied, the repudiation is not considered final, and it is not necessary for the other party to agree to the retraction. QUESTION ID: K0083A Additional Learning
A condition __________ is one that must occur before the duty of performance will arise; the occurrence of a condition __________ will cut off an already existing duty of performance.
A Subsequent; precedent
B Precedent; concurrent
C Precedent; subsequent
D Concurrent; precedent
C
A condition precedent is one that must occur before the duty of performance will arise; the occurrence of a condition subsequent will cut off an already existing duty of performance. Conditions concurrent are those that are capable of occurring together, and that the parties are bound to perform at the same time. Thus, in effect, each is a condition “precedent” to the other. QUESTION ID: K0078C Additional Learning
In contract law, which of the following best summarizes the distinction between the terms “promise” and “condition”?
A The failure to fulfill a promise has no legal significance; the failure to fulfill a condition is a breach of contract.
B A promise is a party’s commitment to do something; a condition restrains a party from acting.
C There is no real distinction; the terms can be used interchangeably.
D A promise binds a party to perform under a contract; a condition creates or extinguishes a duty to perform under the contract.
D
A promise is a commitment to do or refrain from doing something. A promise binds a party to perform under a contract. A condition creates or extinguishes a duty to perform under the contract. A condition is a provision the fulfillment of which creates or extinguishes a duty to perform under a contract. A condition is normally either an event that must occur or fail to occur before a party has a duty to perform under a contract or an event the occurrence or nonoccurrence of which releases a party from the duty to perform under a contract. The distinction between the terms “promise” and “condition” is important in understanding that there is a difference between whether a party is bound under a contract and whether a party who is bound has come under a duty to perform. Thus the terms should not be used interchangeably. The failure to fulfill a promise has legal significance in that it results in a breach of contract. The failure to fulfill a condition is not a breach of contract, but it discharges the liability of the promisor whose obligations on the conditional promise never mature. Either a promise or a condition can be based on positive actions or restraints. A promise can be a commitment to do something or refrain from doing something. A condition is a promise modifier, which could restrain a party from acting or prompt a party to act. The fulfillment of the condition creates or extinguishes a duty to perform under a contract. QUESTION ID: K0077A Additional Learning
