Contracts-Performance, Breach & Discharge

Question 1

Risk of Loss

Answer 1

Non-Carrier:
No carrier, seller = merchant: Risk of Loss on Seller until Buyer takes possession
No carrier, seller = non-merchant: Risk of Loss on Seller until goods are tendered to Buyer
Carrier:
Shipment K (DEFAULT): Risk of Loss shifts from Seller to Buyer when goods are given to Carrier
Destination K: Risk of Loss shifts from Seller to Buyer when goods are delivered to destination
FOB Seller = Shipment K
FOB [Anything else] = Destination K

Question 2

Requirements K

Answer 2

Look for “good faith” = OK

Question 3

Modification

Answer 3

At Common Law, modification requires new CONSIDERATION; can be oral or written
Under UCC, no new consideration needed, only “GOOD FAITH”; clause prohibiting oral modifications = valid
Mutual Modification (both parties agree): OK as long as “fair and reasonable under the circumstances”

Question 4

Timing of Conditions

Answer 4

Condition Precedent: event happens prior to performance of K
Condition Concurrent: event occurs at time of performance of K; each party’s duty to perform is conditioned on the other party’s duty to perform = both parties must perform simultaneously
Condition Subsequent: event occurs after K excuses a duty to perform

Question 5

When will Conditions be excused

Answer 5

Waiver of Condition: The party the condition is intended to benefit always has power to waive it (but the waiver can be retracted)
Bad faith: acting in bad faith using a condition = have to perform anyways (breach of Implied Covenant of Good Faith and Fair Dealing)
Avoiding forfeiture: if a party will suffer a great loss or forfeiture, then the condition will be excused

Question 6

Types of Conditions

Answer 6

Express: created by language demonstrating the parties’ intent to have a condition (e.g., upon condition that, provided that); requires STRICT compliance (except where waived/excused); failure to comply w/ condition = discharge for the other party.
Constructive/Implied: supplied by the ct for FAIRNESS or the nature of the K suggests that parties intended the conditions but failed to include them; only requires SUBSTANTIAL compliance

Question 7

Generally, time is NOT of the essence in a K (unless stated = time is a condition)

Question 8

Good Faith generally required in all K

Answer 8

All K’s contain an Implied Duty of Good Faith and Fair Dealing

Question 9

Non-conforming Goods

Answer 9

If Seller delivers non-conforming goods, Buyer may: (a) reject; (b) accept; or (c) reject in part & accept in part
Rejection must be made in reasonable amount of time
If Buyer accepts, then must pay the price of goods in the original K
Seller’s right to cure:
(1) If Seller had reasonable grounds to think Buyer would accept non-conforming goods, then Seller may cure by giving reasonable notice and making a conforming delivery in a reasonable amount of time
(2) If Seller delivered non-conforming goods prior to delivery date, then Seller may cure by giving reasonable notice and making a conforming delivery on time

Question 10

Non-conforming Shipment of an Installment K

Answer 10

Delivering goods in several different shipments
If one of the installments is non-conforming = generally NOT a total breach if it affects that installment and Seller can’t cure. If Seller can cure, then Buyer must let them (cannot reject if defect can be cured)
However, if the non-conforming installment would MATERIALLY IMPAIR the value of the WHOLE K, then Buyer can hold Seller in TOTAL breach

Question 11

Accommodation

Answer 11

Buyer can either accept or reject

Question 12

Impracticability

Answer 12

Unforeseen circumstances now makes performance of K so difficult/expensive = can be discharged from performance
*Some increase in price does NOT mean impracticability (must be so drastic as to be UNFORESEEABLE)

Question 13

Impossibility

Answer 13

Objectively NOBODY can perform
E.g., Goods are destroyed (under UCC); performance is now illegal
Exceptions:
Temporary impossibility: cannot raise defense if performance is only impossible for a short period of time
Impossibility will not apply if the parties prepared for that event (i.e., foreseeable/contingency)

Question 14

Frustration of Purpose

Answer 14

Core reason for the K no longer exists = performance discharged

Question 15

Anticipatory Repudiation and Demand for Assurance

Answer 15

Before K performance, a party UNEQUIVOCALLY refuses to perform = can be held in total breach immediately
A party can demand ASSURANCE if they suspect the other party might not be able to perform. If assurance not received w/in reasonable amount of time, then they may cancel the K; under UCC, demand for assurance must be in WRITING and reasonable amount of time = 30 days

Question 16

Retraction of Repudiation

Answer 16

Generally, the repudiating party CAN retract unless:
(1) other party has sued;
(2) other party has accepted the repudiation; or
(3) other party has relied on the repudiation