Contract-Performance Flashcards
PWCE performance warranty condition excuse + assign/delegation
Parol evidence rule
prohibits introduction of prior extrinsic evidence that contradicts the terms of a written K.
Parol evidence rule: If completely integrated,
cannot introduce evidence of a prior or contemporaneous agreement between the parties
Parol evidence rule: If partly integrated
If partly integrated, can introduce supplementary terms that are consistent with the K. but NOT contradictory terms.
Parol evidence: exceptions
(1) defense to K formation/enforcement
(2) condition precedent to existence of K;
(3) evidence of a second separate deal; and
(4) evidence interpret an ambiguous term
(5) If UCC—course of performance, dealing, and trade usage to explain/supplement (not contradict) terms, even if terms are not ambiguous.
Interpreting K terms—priority
Priority highest to lowest: express terms, course of performance, course of dealing, trade usage.
Parol evidence: course of dealing
course-of-dealing evidence is admissible to explain or supplement a final written integrated agreement. (even if term is not ambiguous)
e.g. oral negotiations
Performance of a condition C/L
C/L: A party who substantially performs can trigger the other party’s obligation to perform. © Express conditions: doctrine of substantial performance does not generally apply
In defining substantial performance, consider
willful breach—substantial performance is less likely to be found when a party intentionally provides services materially different from what he promised.
benefit of the bargain—if the nonbreaching party does not receive the substantial benefit of the bargain, that is material breach.
Recovery upon substantial performance
Party who substantially performed: can recover on the K
Party who fails to substantially perform: may still recover restitution.
Performance of a condition under UCC
perfect tender
Seller’s duty under UCC
Seller must
a) transfer ownership and
(b) make a conforming tender (perfect goods and perfect delivery
Seller’s duty of perfect delivery
Seller must comply with
(1) timing
(2) place;
(3) manner of tender;
(4) method.
If not specified by K, UCC default presumption is
(1) timing (reasonable time after K);
(2) place (seller’s place of business);
(3) manner of method (one delivery);
(4) method (shipment K—seller must deliver to carrier and give notice to buyer).
Seller’s duty to deliver perfect goods–what are perfect goods
Perfect goods if conforms to express warranty and implied warranties.
Express warranty:
arises when seller makes a promise or affirmation of fact.
© statement of puffery or opinion
Disclaimer of express warranty
general disclaimer of all warranties is NOT sufficient to disclaim an express warranty.
© but if salesperson made an express warranty, and P later signs a K with disclaimer, P may not be able to introduce it due to parol evidence rule.
Implied warranty of fitness for a particular purpose
arises when ∑
(a) seller has reason to know buyer has a particular use of goods and
(b) buyer relies on seller’s skill to select the goods.
Implied warranty of merchantibility
arises when ∑
(a) seller is a merchant dealing with goods at issue;
(b) This warranty warrants that goods are fit for ordinary commercial purpose.
Buyer right to inspect:
Buyer has right to inspect goods before deciding whether to accept or reject.
Right to inspect is generally a condition to payment unless K specifies otherwise.
Buyer’s acceptance occurs when
(1) expressly accepting;
(2) using the goods; or
(3) failing to reject
Buyer can revoke acceptance when
Revoking acceptance: allowed if ∑
(a) nonconformity substantially impairs the value fo the buyer; and
(b) (i) buyer didn’t discover nonconformity through no fault of his own; or (ii) buyer accepted nonconforming goods thinking seller would cure it (and he didn’t).
Buyer cannot revoke acceptance when
© cannot revoke after a substantial change in the condition of the goods not caused by the defect.
Buyer duty upon revoking
must give timely notice and retain possession of rejected goods for a reasonable time to allow seller to reclaim.
Buyer’s rejection requires
(a) give notice
(b) within reasonable time
(c) before acceptance
Seller right to cure
Seller can cure a defective tender
(1) if there is time left on K; or
(2) there’s reasonable ground to believe buyer would accept despite nonconformity.
Seller must give notice of intent to cure and make a new conforming tender within reasonable time.
Buyer right to reject limitation for installment K
“substantial impairment” standard for determining whether a buyer can reject a particular installment or cancel the entire contract.
Buyer can reject an installment if a nonconformity substantially impairs that installment and the nonconformity cannot be cured.Q4712
Condition: standard to determine whether a condition is satisfied
objective standard
© K based upon aesthetic taste—subjective standard. (honest dissatisfaction with good faith
Condition: Waiver
A party whose duty is subject to a condition can waive the condition, either by words or by conduct.
Condition: Reinstating a waiver of a condition
A condition may be reinstated if the waiving party communicates a retraction of the waiver
(a) before the condition is due to occur, AND
(b) before other party suffers detrimental reliance
Condition: wrongful interference (doctrine of prevention)
if a party whose duty is subject to condition wrongfully interferes with the occurrence of that condition, the condition is excused, and interfering party must perform.
Condition: estoppel
If a party says it will not enforce a condition, and the other reasonably relies on it, the party is estopped from later enforcing the condition.
Impracticability
discharges duty to perform if
(a) unforeseeable– unforeseeable event;
(b) basic assumption– nonoccurrence of the event was the basic assumption on which K was made; and
(c) fault–party seeking discharge was not at fault (assumption of risk)
Frustration of purpose:
discharges party’s duty to perform/allows party to rescind if unexpected events arise that destroy one’s purpose in entering K.
Unexpected event must be so severe that it’s not within assumed risks inherent under K.
Delegation of K
Delegation is not permitted when
(1) a party has substantial interest in having the delegator perform; or
(2) prohibited by K
Liability after delegation
Delegator remains liable unless the other party agrees to a novation
Delegatee liable only if she receives consideration from delegating party
Delegation vs. Novation
Novation requires agreement of both parties, and excuses the person from liability.
Delegation does not require agreement of both parties and does not excuse.
Valid assignment of K
arises when the holder of a right manifests the intent to make a present transfer of that right to be paid to the assignee.
(distinguish from promise to pay assignee upon being paid by 3rd party by vs. assignment of right to direct payment by 3rd party)
K clause prohibiting assignment
eliminates right to assign but not power to assign. Assignor liable for breach, but assignee can sue to enforce if he didn’t know of the prohibition
Revocation of assignment: gratuitous
gratuitous assignment: freely revocable
assignment with consideration: irrevocable
Vesting of intended beneficiary’s rights (3 ways)
Rights of intended beneficiary vest when beneficiary (3 options):
1. Detrimentally relies on rights created;
- Manifests assent to K at one of the party’s request; or
- Files lawsuit to enforce K.
Auction without reserve
Auctioneer must accept whatever is bid for the item being auctioned.
An auctioneer cannot resurrect a rejected bid.
Auction with reserve
auctioneer can refuse to accept the final bid for an item. can resurrect a rejected bid.
Parol evidence rule: merger clause
is evidence of total integration
UCC presumption in parol evidence rule:
UCC presumes Ks are partially integrated and allows addition of consistent terms © merger clause
Disclaimer of warranties
“general disclaimer of all warranties” is insufficient to disclaim an express warranty.
sufficient to disclaim implied warranty of fitness
Seller right to cure after time passed
If reasonable ground to believe that buyer would accept despite nonconformity, right to cure EVEN AFTER the time for performance under the contract has elapsed Q8573
Intended beneficiary:
(a) identified and named in the contract
(b) receives performance directly from the promisor OR promisee intends to benefit the third party
Disclaimer of implied warranties
- fitness
- merchantability
Exceptions
Implied warranty of fitness: sufficient if conspicuous and in writing
Implied merchantability: sufficient if mentions the word merchantability and conspicuous (need not be in writing)
Exceptions:
(1) conspicuous “as is”
(2) before entering into K, buyer inspected the goods/sample as he desired OR refused to inspect = no implied warranty with respect to defects that wouldve been revealed
(3) course of dealing/performance/trade usage
Beneficiary right to sue under K
An intended beneficiary has a right to bring an action on the contract.
© An intended beneficiary of a gift promise (not creditor beneficiary) may sue only the promisor (the performer), not the promisee (the one who intended to benefit the beneficiary)
Auction with reserve: right to withdraw item
Items may be withdrawn from sale any time BEFORE the completion of the sale is announced (when auctioneer accepts the highest bid).
Auction type presumption
In the absence of language to the contrary, the auction of an item is with reserve.
