Exceptions, Exclusions to material breach Flashcards
Divisible contracts
A contract is said to be divisible if it is possible to apportion the parties’ performance into matching or corresponding pairs that the parties treat as equivalents.
If a contract is divisible, what happens if part is breached and part is not?
A party who has performed one or more parts is entitled to collect the contract price for those parts, even if they breach the other parts. The right to collect the contract price for the parts performed is subject to an offset for damages resulting from breach of the other parts.
“Entire” contract
A contract that is not divisible is said to be “entire”
To say that a contract is “entire” means . . .
only that the need to show substantial performance of the whole contract is a condition to bringing suit on the contract and cannot be avoided by bringing suit on indivisual parts of the contract.
Employment contracts
If an employment contract or a statute requires periodic salary payments, courts usually hold the contract to be divisible into different time periods. Therefore, if an employee breaches the contract, they may recover wages for each period worked, minus offset if any resulting from breach.
What UCC section governs installment contracts?
2-612
Installment contracts
A contract in which the goods are to be delivered in multiple shipments and each shipment is to be separately accepted by the buyer. Parties cannot vary or contract out of this definition.
When is payment by the buyer due under installment contracts?
upon delivery of each shipment, unless the price cannot be apportioned
Does the perfect tender rule apply to installment contracts?
No. Instead the right to reject is determined by a “substantial conformity” standard.
What happens with nonconforming segments in an installment contract?
If the seller makes a nonconforming tender or tenders nonconforming goods under one segment, the buyer can reject only if the nonconformity:
* Substantially impairs the value of that shipment to the buyer; and
* Cannot be cured.
Installment contracts and adequate assurance
If the seller makes adequate assurances that the seller can cure the nonconformity, then the buyer must accept the shipment
Defining “substantially impairs” for installment contracts
It is analyzed under the material breach factors
How is cure of nonconformity of installment contracts usually cured?
By an allowance against the price or in the case of reasonable discrepancies in quantity either by a further delivery or partial rejection
What are “adequate assurances” when two merchants are involved?
Commercial standards apply in evaluating the assurances
What happens to the remaining segment of an installment contract?
When there is a nonconforming tender or a tender of nonconforming goods under one segment of an installment contract, the buyer may cancel the entire contract only if the nonconformity substantially impairs the value of the entire contract to the buyer
