Contracts _ Perf, Breach, and Discharge

Question 1

Non-Carrier Case:
Seller is a Merchant

RISK OF LOSS

Answer 1

• Seller is a merchant: risk on seller until
  buyer takes possession

Question 2

Non-Carrier Case:
Seller is NOT a Merchant

RISK OF LOSS

Answer 2

Seller is a nonmerchant: risk on seller until
goods are tendered to buyer

Question 3

Shipment Contract

RISK OF LOSS

Answer 3

Risk of loss shifts to buyer when goods delivered to CARRIER (like UPS) DEFAULT RULE :)

Question 4

Destination Contract

RISK OF LOSS

Answer 4

Risk of loss shifts to buyer when goods delivered to BUYER’S DESTINATION

Question 5

FOB SELLER v FOB “Anything Else”

RISK OF LOSS

Answer 5

FOB SELLER = SHIPMENT K = **risk of loss to buyer - once it’s on the carrier. **
**FOB ‘anything else” **= Destination K = risk of loss to seller

Question 6

Requirements Contract:

REQUIREMENTS CONTRACT

Answer 6

• Buy all the widgets
• Key word: good faith

Question 7

Modification Rule (general)

MODIFICATION

Answer 7

Changing a material term of contract

Question 8

Modification Rule - COMMON LAW v UCC
(hint: consideration)

MODIFICATION

Answer 8

Common Law: New consideration is needed
UCC: No new consideration, good faith needed

Question 9

Oral / Written Modification

MODIFICATION

Answer 9

• Can be oral or written
• UCC: Clauses prohibiting oral modifications are valid

Question 10

Mutual Modification

MODIFICATION

Answer 10

1) Both parties agree to modify the original terms
2) “Fair and reasonable under circumstances”

Note: Promise to increase the pay, can be modified, so long as the performance is gonna be different.

Question 11

CONDITIONS (general)

CONDITIONS

Answer 11

some event that has to occur, or the failure to occur = discharges the performance to perform unless this occurs.

Question 12

Condition Precedent

CONDITIONS

Answer 12

Event happens prior
to performance of K

Question 13

Condition Concurrent

CONDITIONS

Answer 13

event occurs at time
of performance of K

Question 14

Condition Subsequent

CONDITIONS

Answer 14

event occurs after
the K

Question 15

Conditions Excused (3)

CONDITIONS

Answer 15

• Waiver (Don’t worry about it - they will tell you)
• Bad Faith = if they perform/acts in bad faith, the party must still perform. (they didn’t try to do it, or takes advantage = bad faith)
• Avoiding forfeiture (if a party would suffer a great loss or forfeiture, it will be excused. )

Question 16

Time is of the Essence:

CONDITIONS

Answer 16

• Time is NOT of the Essence unless stated
• If stated, it becomes a condition to the K

Question 17

Buyer’s Rights:

NON-CONFORMING GOODS

Answer 17

• May reject (must be in reasonable amount of time)
• May accept (must pay the amount of the goods in the original K)
• May reject in part & accept in part

Question 18

Seller’s Right to Cure

NON-CONFORMING GOODS

Answer 18

1) Seller had reasonable grounds to believe the goods would be acceptable
2) By notice + new tender within time for performance

Question 19

Installment Contract:

NON-CONFORMING GOODS

Answer 19

• Delivering goods in several different shipments

INSTALLMENT K - goods to be delivered in separate shipments/lots. then look at if the ONE OF THE NONCONFORMING OF LOTS/SHIPMENTS impairs/ruins the value of the ENTIRE/WHOLE K, then it’s a total breach

Question 20

Non-Conforming Installment Contract:

NON-CONFORMING GOODS

Answer 20

• Defective shipment cannot be rejected if the defect can be cured

if however, that nonconforming shipment only effects that installment/lot, and seller can CURE IT, buyer can reject that shipment only, but must ACCEPT THE RIGHT STUFF.

if seller sends buyer “accommodations”, buyer has the choice, to either reject it or accept it!

Question 21

Impracticability

DISCHARGE

Answer 21

• Unforeseen event makes performance too difficult/expensive

Question 22

Impossibility

DISCHARGE

Answer 22

• No one can perform // unforeseen circumstance has occurred where it’s now impossible to the point no one can do it.

Examples
o UCC: Goods are destroyed
o Performance is now illegal

Question 23

AdaptiTip:

If there is a temporary issue or the parties were prepared, will impossibility apply?

DISCHARGE

Answer 23

If there is a temporary issue or the parties were prepared, impossibility will not apply

Question 24

Frustration of Purpose:

DISCHARGE

Answer 24

• The core reason for K is no longer present

*this is where you’re discharged from performing because the reason you entered into the K is no longer present/materially achievable. *

Ex: You entered into a contract to work with Jon to prepare for the bar exam. Now, you decided not to take the exam

Question 25

Anticipatory Repudiation

ANTICIPATORY REPUDIATION

Answer 25

1) Before contract performance
2) One party UNEQUIVOCALLY refuses to perform

• Before a K is going to be performed, one party calls the other, and unequivocally refuses to perform the K. (refusal is absolute) the innocent party can hold the breaching party in a total breach, and sue for breach of K.
• if you say “i don’t think i can do it” it’s not absolute! but you can also wait to see

Question 26

Demand Assurances

ANTICIPATORY REPUDIATION

Answer 26

• Demand when doubtful about performance
• Party must respond in a reasonable amount of time (~30 days)
• UCC: Demand must be in writing

Question 27

Retraction of Repudiation:
Party can retract unless:

Answer 27

• The other party has sued
• The other party has accepted the repudiation
• The other party has relied on the repudiation