Contracts _ Perf, Breach, and Discharge Flashcards
Non-Carrier Case:
Seller is a Merchant
RISK OF LOSS
- Seller is a merchant: risk on seller until
buyer takes possession
Non-Carrier Case:
Seller is NOT a Merchant
RISK OF LOSS
Seller is a nonmerchant: risk on seller until
goods are tendered to buyer
Shipment Contract
RISK OF LOSS
Risk of loss shifts to buyer when goods delivered to CARRIER (like UPS) DEFAULT RULE :)
Destination Contract
RISK OF LOSS
Risk of loss shifts to buyer when goods delivered to BUYER’S DESTINATION
FOB SELLER v FOB “Anything Else”
RISK OF LOSS
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
Requirements Contract:
REQUIREMENTS CONTRACT
- Buy all the widgets
- Key word: good faith
Modification Rule (general)
MODIFICATION
Changing a material term of contract
Modification Rule - COMMON LAW v UCC
(hint: consideration)
MODIFICATION
Common Law: New consideration is needed
UCC: No new consideration, good faith needed
Oral / Written Modification
MODIFICATION
- Can be oral or written
- UCC: Clauses prohibiting oral modifications are valid
Mutual Modification
MODIFICATION
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.
CONDITIONS (general)
CONDITIONS
some event that has to occur, or the failure to occur = discharges the performance to perform unless this occurs.
Condition Precedent
CONDITIONS
Event happens prior
to performance of K
Condition Concurrent
CONDITIONS
event occurs at time
of performance of K
Condition Subsequent
CONDITIONS
event occurs after
the K
Conditions Excused (3)
CONDITIONS
- 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. )
Time is of the Essence:
CONDITIONS
- Time is NOT of the Essence unless stated
- If stated, it becomes a condition to the K
Buyer’s Rights:
NON-CONFORMING GOODS
- 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
Seller’s Right to Cure
NON-CONFORMING GOODS
1) Seller had reasonable grounds to believe the goods would be acceptable
2) By notice + new tender within time for performance
Installment Contract:
NON-CONFORMING GOODS
- 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
Non-Conforming Installment Contract:
NON-CONFORMING GOODS
- 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!
Impracticability
DISCHARGE
- Unforeseen event makes performance too difficult/expensive
Impossibility
DISCHARGE
- 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
AdaptiTip:
If there is a temporary issue or the parties were prepared, will impossibility apply?
DISCHARGE
If there is a temporary issue or the parties were prepared, impossibility will not apply
Frustration of Purpose:
DISCHARGE
- 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
Anticipatory Repudiation
ANTICIPATORY REPUDIATION
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
Demand Assurances
ANTICIPATORY REPUDIATION
- Demand when doubtful about performance
- Party must respond in a reasonable amount of time (~30 days)
- UCC: Demand must be in writing
Retraction of Repudiation:
Party can retract unless:
- The other party has sued
- The other party has accepted the repudiation
- The other party has relied on the repudiation